Semiconductor stocks continue to rally and will continue to do so as long as the artificial intelligence (AI) and data center themes stay hot. So far, it appears that trend could persist for some time.
With the world getting more reliant on technology, processing power will be necessary to power applications such as AI and data centers. Per a CNBC report, consulting firm Bain published an annual technology report saying that companies will make "unprecedented levels of investment" in technological infrastructure as AI becomes a mainstay in corporate operations.
In today's world, information is power and data centers will be necessary to house said information.
“If large data centers currently cost between $1 billion and $4 billion, costs for data centers five years from now could be between $10 billion and $25 billion,” Bain noted in the report, adding that data center operators as well as hardware suppliers will see an influx of capital investments from public and private entities to shore up computing capacity.
Of course, one of those names is Nvidia, which has been a darling for semiconductor investors this year. The stock is up over 150% this year, giving short-term traders plenty to cheer about if they rode the Nvidia rally from the beginning. As the Bain report mentioned, it will also see major investments from governments around the world.
"Nvidia, for example, projected $10 billion in revenue from governments’ sovereign AI investments in 2024, up from zero last year," the report said.
