JPMorgan: Semiconductors — CES Overview; Strong AI Backlog Eases Spending-Peak Concerns, Cyclical Recovery Accelerates
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JPMorgan's meetings at CES 2026 with companies including NVIDIA, Marvell, Analog Devices, Micron, Synopsys, and others reinforced a constructive outlook for the semiconductor sector. AI-related demand and hyperscale data-center buildouts remain exceptionally robust, alleviating concerns about a near-term spending peak, while cyclical end markets show accelerating recovery signals.
NVIDIA highlighted that its backlog still exceeds $500 billion with potential upside from new customer agreements, and management is already deep in 2027 deployment discussions with clients. Network attach rates have climbed to roughly 90%. Marvell reported strong near-term AI orders, with custom ASIC revenue projected to double to $3.6 billion in 2027, driven by Amazon Trainium 3, a third Tier-1 XPU customer, and fifteen new XPU interfaces. Its data-center revenue is accelerating, growing 25% in 2026 and 40% in 2027.
Cyclical recovery is gaining traction. Analog Devices indicated that industrial and communications businesses are leading the rebound, with inventory digestion largely complete and data-center revenue up 50% year-over-year. Micron noted that AI-driven demand is tightening memory supply, supporting expected DRAM price increases of nearly 60% in 2026.
Physical AI and edge AI emerged as prominent themes. NVIDIA is extending its reach across simulation, robotics, and edge devices, while Intel launched Core Ultra 3 (Panther Lake) capable of handling 70-billion-parameter models. JPMorgan maintains its overweight stance on the semiconductor sector for 2026, favoring AI and accelerated-computing names alongside beneficiaries of advanced chip-design and EDA toolchain monetization.