AI winners may still become cyclical value traps if today’s extraordinary semiconductor demand proves to be peak-cycle earnings rather than a new normal. The risk is not only valuation compression, but a later reset in revenue, margins, and capital spending.
This article analyzes semiconductor cyclicality, AI hardware economics, and the effects of competition, open-source models, and efficiency gains on long-term market structure. It argues that current AI-related valuations may overextend recent growth trends and that AI commoditization, rather than the collapse of SaaS, may be the more plausible long-term outcome.