Memory Chip Valuations Hit 2025 Highs Despite Frothy Multiples; NVDA, AMD, AVGO Extended on AI Demand

One of the market's most persistent fears, that AI capex is nearing a peak, was dealt a blow on May 15 by the blockbuster IPOInitial Public Offering - a company's first public sale of stock. of Cerebras Systems, an AI semiconductor company that raised $5.55 billion and surged on debut. Simultaneously, memory chip makers like Micron Technology, SK Hynix indications, and chipmakers Broadcom and AMD all signaled that orders for high-bandwidth memory (HBM), VRAM, and AI networking silicon remain backlogged well into 2027. The narrative flipped from "is capex slowing?" to "capex is doubling down."

The engine is straightforward: every AI model training cluster, every inference farm, and every enterprise deployment requires not just GPUs (NVDA's dominion) but also the DRAM, HBM, and networking glue that ties it all together. Broadcom has become the "picks and shovels" play, supplying the switching and interconnect fabric for data centers. AMD's EPYC CPUs and Instinct accelerators are gaining share from Intel. Micron is scrambling to expand HBM output. Even older chip names like Rambus are getting bids from AI-hungry customers. The conventional wisdom that one stock (NVDA) would capture all the upside has given way to a more distributed narrative: AI capex benefits the entire semiconductor stack.

Valuations are stretched, however. Many of these names trade at 40-60x forward earnings, a level that left the broader market in 2018. The justification is that AI is a multi-year, multi-trillion-dollar infrastructure rebuild, not a one-year bump. Orders are real, not vapor. But the gap between price and fundamental value has widened, and any disruption to demand, whether from an economic slowdown, a shift to more efficient models, or regulatory intervention, could trigger a sharp repricing. Enterprise cloud budgets are being redirected toward AI, but consumer spending remains soft, raising questions about whether capex can sustain without a broader economic reacceleration.

For now, the momentumThe empirical fact that winners keep winning over the medium term. is squarely with the bulls. Hyperledger decentralized AI initiatives, Solana's AI token ecosystem, and traditional OEMs' custom silicon programs all suggest the capex cycle is fractal: it is not just NVDA, it is NVDA plus 50 other companies in a supply chain race. The risk is concentration; the opportunity is diversification. Traders who bought the whole semiconductor stack in May are outperforming those who went all-in on a single name.