Semiconductor Sector Adds $3.8 Trillion in Market Cap as AI Demand Broadens

The global semiconductor industry has added $3.8 trillion in combined market capitalisation over the past 12 months, a figure greater than the annual output of the world's third-largest economy. Investment in AI infrastructure spreading beyond hyperscale cloud providers into corporate data centres and next-generation consumer devices is the rally's main driver.

Nvidia, AMD and Taiwan Semiconductor captured the bulk of the gains, but memory makers SK Hynix and Micron and equipment vendors ASML and Applied Materials have also performed strongly in recent months. Analysts say demand is no longer driven by a single cyclical peak but by a multi-year wave of infrastructure spending.

Some investors warn, however, that valuations have stretched. The semiconductor index trades above its decade average on price-to-earnings multiples. Ahead of the Trump-Xi summit, US export curbs on China and lingering tariff uncertainty stand out as the sector's biggest risks over the coming quarters.