What returns to expect on Cloud AI?

After a string of multi-GW contracts and capex announcements, the attractiveness of cloud AI returns remains a hot question amongst investors. In this report, we build a simple framework to answer that question. We estimate Cloud AI returns from CSP disclosures and what we know about large real-world contracts, and benchmark them against what we know about the economics of traditional cloud.

Semicap in 2026 on a single slide: the growth outlook doesn’t justify ...

Last week, we published our updated view on semicap, assessing the implications for WFE, of AI spending reaching $2-3tn in 2030. For the updated associated view on each semicap name, summarized in a single slide, follow the link below.

Strengthening AI infrastructure outlook: Implications for semicap

The last earnings season provided tangible indications that both 2026 and 2027 will be very strong growth years for AI infrastructure, a view confirmed by TSMC yesterday. Please see the link for the implications and our updated view on semicap vendors.

Bible 3Q25 – Semicap: Cautious on 2026; not the right AI play.

Today, we are publishing the Semicap Equipment section of our 29th Tech Infrastructure Quarterly Bible. The Tech Bible is a must-read for any tech investor, as it summarizes the quarterly earnings reports from the over 140 companies we track, providing an update on our key perspectives and convictions. In the coming weeks we will publish sections on Automotive, Hyperscale & Cloud, Telecom Equipment, Industrials, PCs, Enterprise IT, and Foundry. 3Q25 semicap revenues were flat QoQ, with China up...

Cloud growth, AI capex, Nvidia Guide, Memory, Auto Semi Cycle and more...

As always, during earnings season, we wrap-up what happened in the previous week. For our main takes summarized on a single slide, and a few words on each of the names we followed last week, follow the link below.

TEL 2FQ26 QT: HBM drives beat. More positive tone on 2026.

Tokyo Electron published its 2FQ26 results this morning. Please see the link for our take on the print.

How much WFE is required to produce a 1 GW datacenter?

As a follow up to our cheat sheet summarizing the cost structure of a 1GW datacenter, we estimate today on a single slide WFE required to produce semiconductors for a 1 GW datacenter, with our usual important caveat: WFE spending is driven by the growth of production capacity. In other words, one spends once on WFE to build a 1GW datacenter many times over.

Semicon West: 2026 outlook? Does AI drive growth? DRAM architectures? ...

Last week we attended the 2025 edition of the Semicon West conference, the key event for investors focused on the semiconductor equipment market. Over two days we hosted more than a dozen meetings with companies across the semiconductor value chain. Here are our key takeaways.

Semicap and the $3tn AI bull-case: material upside, but well below the...

We published earlier this week our updated view on the Semicap rally, looking at the implication of AI spending tripling by 2030 for WFE spending. Today, we publish a follow-up looking at the implications of the $3tn AI bull case for Semicap on a single slide.

PSA Japan Market Strategy: Market Implications from Takaichi's Suprise...

The Japanese stock market’s take on the surprise victory of Sanae Takaichi in the LDP Presidential race suggested that it wasn’t so much a repeat of the “Koizumi Boom” from 20 years ago, but rather a brand new “Takaichi Boom”, and we saw the Nikkei 225 jump +4.8% to just under 48,000. Pelham Smithers compares and contrasts the impact and flags “Takaichi Stocks”. Importantly, market valuations suggest further upside.

Does the Semicap rally have legs? Downgrading ASML to Neutral

The outlook for AI spending has strengthened in recent months, driving a rally in Semicap stocks. Our forecast embeds AI capex tripling by 2030, requiring ~$130bn of cumulative WFE spending, but driven by the first-order derivative of AI deployments, i.e. peak acceleration this year and peak spending next year; a trajectory in expectations already and resulting in a weak outlook beyond 2026. With near-term uncertainty, limited upside to 2026 forecasts, and valuations 2–12 turns above historic ...

PSA Strategy: Japan Stock Market Quarterly for 2025 Q4

For almost three years the Nikkei 225 has been tracking its performance from the 2003~5 bull market, albeit at levels some 3.3x higher In this report, Pelham Smithers discusses the similarities and asks three key questions: (1) Can we continue to track 2005 through the rest of the year; (2) Whatever happens in Q4, should we fear or be hopeful for 2026? And (3) Who are the upcoming winners and losers.

ASML investing in Mistral – Strategic core or distraction?

Media reported yesterday that ASML will invest €1.3bn in Mistral AI, a French start-up developing frontier AI models, as part of a €1.7bn Series C funding round valuing Mistral at €10bn pre-money. Click on the link below for our quick read.

Bible 2Q25 – Semicap: Cautious view justified; expectations at risk fo...

Today, we are publishing the Semicap section of our 28th Tech Infrastructure Quarterly Bible. The Tech Bible is a must-read for any tech investor, as it summarizes the quarterly earnings reports from the over 140 companies we track, providing an update on our key perspectives and convictions. In the coming weeks we will publish sections on Hyperscale & Cloud, PCs, Enterprise IT and Foundry. 2Q25 semicap revenues up 2% QoQ, 2% above consensus. China up 19% after a 17% decline in 1Q, with manufac...

Bible 2Q25 – Memory: margins of conventional DRAM to expand as HBM gro...

Today, we are publishing the Memory section of our 28th Tech Infrastructure Quarterly Bible. The Tech Bible is a must-read for any tech investor, as it summarizes the quarterly earnings reports from the over 140 companies we track, providing an update on our key perspectives and convictions. In the coming weeks we will publish sections on Automotive, Hyperscale & Cloud, Telecom Equipment, PCs, Enterprise IT, Foundry and Semicap Equipment. DRAM COGS up 25% YoY and 21% QoQ, driven by seasonality,...

PSA Semiconductors / SPE: Tokyo Electron (8035 JT) FY25 Q1 Results Rev...

With the release of TEL's disappointing FY25 Q1 results, Pelham Smithers asks whether it is a one-off, or whether TEL is a “canary in a coal mine”?

AI capex & replatforming; semicap into 2026; Apple, Arm & more.

As always, during earnings season, we wrap-up what happened in the previous week. For our main takes summarized on a single slide, and a few words on each of the 34 names we followed last week, follow the link below.

TEL 1FQ26: Miss and guide down; cautious tone on 2026. Neutral, ¥25,20...

TEL 1FQ26: Miss and guide down; cautious tone on 2026.

Tokyo Electron reported 1FQ26. Please click the link for our take on the print.

America’s AI Action Plan. Our 5 quick takes.

The Trump administration published its AI Action Plan yesterday. Please click the link below to see our summary on the 5 most relevant points for tech infrastructure and the broader AI supply chain.