Valueworks CIO Charles Lemonides said a strong rebound in chip stocks after this
selloff would not be surprising, but they are unlikely to lead the next phase of
a bull market because they have already had their run. He noted Amazon and
Microsoft last week reiterated commitments to spend hundreds of billions of
dollars on AI over the next year, much of it for data-center chips, but said the
ensuing fundamentals are in doubt. Chip names, especially storage-focused firms,
are highly cyclical and prone to boom‑and‑bust demand swings; many on Wall
Street expect this cycle to be no different. Lemonides called the recent
earnings surge unsustainable and flagged margin reversion toward historical
norms as the key risk — the question is when that reversion occurs and how
markets will price it.
