Wolfe Research analyst cites physical infrastructure constraints and AI-driven demand as barriers to oversupply until at least 2028.
A top semiconductor analyst dismissed oversupply risks before 2028, citing sold-out foundries and years-long fab construction timelines. Wolfe Research’s Chris Caso argued that physical infrastructure constraints prevent a supply glut, with TSMC fully booked and new facilities unlikely to ease pressure soon.
AMD’s data center revenue surged 57% to $5.8 billion, while Western Digital reported over 50% gross margins, underscoring AI-driven demand. The SOXX index has retreated 25% from recent highs, but Caso sees no near-term bust, as capacity expansion remains slow and costly.
Caso noted that even reaching potential oversupply would require new buildings, a process unlikely to materialize before 2028. The sector’s pullback reflects short-term sentiment, not fundamentals, he added.