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London, United Kingdom, Nov 07, 2025, The year is closing with one question on nearly every investor’s mind, are AI chip companies still worth buying? After a year of explosive gains across the semiconductor sector, investors are debating whether the rally has more room to run or if valuations have already reached their peak. Emma Cogan, Senior Equity Strategist at St Mary Capital, believes the story isn’t over, instead it’s becoming more selective.
Artificial intelligence has been the defining theme of 2025. From data centers to smartphones, demand for advanced chips has surged as companies race to build and train more powerful AI models. Semiconductor giants have seen revenues soar, and smaller players have rushed to capture a piece of the market. Yet with the year drawing to a close, investors are asking whether they’re late to the party.
Cogan’s view is balanced. She acknowledges that the easy money in AI chips may already be behind us, but she argues that the long-term story remains powerful. “AI isn’t a one year trend, it's an infrastructure buildout that will last the rest of the decade,” she says. “What we’re seeing now is a natural cooling period after an extraordinary run.”
The Growth Story Still Has Legs
Semiconductor demand is still expanding, driven by cloud computing, autonomous systems, and enterprise AI integration. Industry forecasts suggest that global AI chip revenue could surpass $250 billion by 2028, nearly doubling from today’s levels. For investors, the key lies in identifying which companies have sustainable competitive advantages rather than chasing momentum.
According to research, firms with deep integration into the data center ecosystem, those providing not just chips but also the software and networking backbone are likely to maintain growth even as competition increases. Meanwhile, companies focused solely on consumer AI applications could face margin compression as the market matures.
Cogan highlights that investors should pay attention to the supply chain as well. Demand for high quality chips has created bottlenecks in packaging, testing, and materials, areas where secondary suppliers could quietly outperform the well known giants.
After a massive run up in prices, the question of valuation looms large. Many leading semiconductor stocks are trading at forward price ratios well above historical averages. Cogan notes that while those multiples may look stretched, they reflect genuine growth potential particularly as chipmakers transition from cyclical manufacturers to long term AI infrastructure providers.
Still, she advises caution around short term trading. Historically, chip stocks tend to consolidate toward the end of the year before resuming momentum in early Q1. That pattern, she says, could repeat if macro conditions including interest rate stability and continued enterprise tech spending remain supportive.
The next wave of opportunity may come from diversification within the AI hardware ecosystem. That includes chip design automation firms, cooling technology manufacturers, and energy efficient data center providers. These segments are still in the early stages of adoption but could become critical as AI workloads grow.
Geopolitics will also play a role. Export restrictions, regional manufacturing shifts, and government subsidies are reshaping the competitive landscape. Cogan’s team expects 2026 to bring a clearer picture of which global players will emerge strongest from this transition.
For now, she believes a measured approach works best. Investors should look for companies with strong balance sheets, stable cash flow, and strategic positioning within the AI supply chain rather than simply chasing headlines.
As 2025 winds down, the AI chip sector remains one of the most compelling and complex areas in technology investing. While short term volatility may test patience, the structural demand for computing power shows no signs of fading.
For retail investors, the message is straightforward. The next phase of the AI chip story won’t be about hype, it will be about staying power. And those who position early, but wisely, may find that this year’s rally was just the beginning.
Disclaimer: This article is purely informational and doesn't offer trading or financial advice. Its content is not intended to be investment advice. We do not guarantee the validity of the information, especially when it pertains to third-party references or hyperlinks.
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