AI Demand is ‘Unlimited’. So Why Are Chip Stocks Falling?
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AI bosses claim demand is ‘almost unlimited’. The market isn’t so sure.
Chip and data-centre stocks are volatile even as executives insist orders are booked out for years, a gap that suggests expectations outweigh actual demand.
July 12, 2026 – 2:32 pm
Image by: Shutterstock
TL;DR
AI executives maintain demand is “almost unlimited,” citing Pat Gelsinger’s belief that energy availability is the only real limiter. However, chip and data-centre stocks fluctuate due to a significant year-to-date rally in the PHLX chip index, reflecting flawless execution in areas like Samsung’s profit surge despite falling shares.
Why are stocks wobbling if demand is strong?
Because current stock prices already incorporate this expected growth. Good news doesn’t cut it anymore; it must be exceptional. Meta’s plan to sell excess AI computing capacity further heightened investor nerves.
The Bull and Bear Cases
Bulls argue that real numbers back up the demand, as companies are profitable and supplier orders are genuine. SoftBank’s Masayoshi Son even dismisses calling AI a bubble.
Bears, however, question the stock prices, noting market concentration is high and returns on capex remain uncertain. They argue that while demand might be genuine, stocks could be overvalued.
The Energy Constraint
Gelsinger’s caveat is crucial: If energy availability limits AI growth, then chips are no longer the bottleneck. The sector’s valuations rest on infrastructure they don’t control. Capital flows towards this gap, with startups backed by Nvidia focusing on data centre power solutions. Grids, turbines, and regulatory processes move at different timescales.
The Volatility Conundrum
The industry believes demand is infinite, but electricity supply is finite. The share prices reflect this discrepancy.