A wide range of semiconductor firms remain positive on supply and demand dynamics heading into 2026, according to BNP Paribas Research.
The global financial firm held its Silicon Valley Bus Tour last week, meeting with executives from AMD (AMD), Nvidia (NVDA), Intel (INTC), Applied Materials (AMAT), Astera Labs (ALAB), Credo Technology (CRDO), Lumentum Holdings (LITE), Seagate Technology (STX), Marvell (MRVL) and Western Digital (WDC).
“Across AI Compute, companies we met all were very constructive on CY26 and upcoming ramps, with demand well ahead of supply,” said BNP Paribas analysts David O’Connor and Karl Ackerman in an investor report. “Investors’ key concerns were power availability, ASIC competition and vendor financing.”
AMD and Nvidia both said power supply is getting tight across the U.S. However, both companies felt the government is making moves to ease power constraints, and this is more of a short-term issue.
“There was a universal acknowledgement that power is the primary bottleneck of the AI arms race,” O’Connor said. “While Nvidia acknowledged that access is tight, they do not see an energy wall and expect builds to accelerate. Foreign investments could increase given the US is the most capacity constrained. To accommodate hyperscalers’ multi-year roadmaps and Nvidia’s 9-12-month lead times, visibility across the data center ecosystem has extended to multiple quarters which has improved supply chain efficiency and pricing dynamics.”
Another potential concern discussed was the introduction of custom silicon, such as Google’s (GOOG)(GOOGL) tensor processing units, or TPUs, using application-specific integrated circuits, or ASICs.
“Following recent TPU announcements, ASIC competition was in the spotlight,” O’Connor noted. “Compute names emphasised that TPUs are optimized for certain clouds/workloads (e.g. Anthropic, GCP) and are not optimized for all clouds (unlike GPUs), and thus market share gains should not be extrapolated outside of existing TPU adopters.”