Semiconductor stocks have been the most crowded corner of the AI trade in 2026.
Memory company margins are at records, and chip ETFs have rallied sharply
The consensus view on Wall Street has been straightforward: As long as the biggest cloud platforms keep spending on AI infrastructure, demand for chips has nowhere to go but up. On June 30, Scott Chronert noticed something that puts a question mark on that assumption. Chronert is Citi’s head of U.S. equity strategy and has been among the more bullish voices on equities this year, carrying an 8,100 year-end S&P 500 target above most of his peers.
The note he published on June 30 is not a bearish call on the market. It is a specific observation about a tension building inside the AI trade that semiconductor investors may not have fully priced in yet. Citi said hyperscalers need something to show for their investment Chronert’s characterization of the setup was direct, Seeking Alpha reported. “The tech trade is approaching a pivotal moment as rising semiconductor memory prices are set to clash with hyperscalers’ return on investment expectations.” The note is specifically about memory.