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Strong AI demand and rising chip revenue forecasts could support semiconductor stocks in 2027.
Micron contracts, Broadcom's AI outlook and ASML's orders signal continued industry investment.
CHPX, FTXL, SMH and SOXX offer chip exposure, with CHPX having the lowest P/E among them.
Semiconductor stocks have faced heavy selling pressure in recent sessions, withiShares Semiconductor ETF (SOXX - Free Report) plunging about 12% over the past five days (as of Oct. 15, 2026) (at the time of writing), due to rising rate worries. But CNBC's Jim Cramer believes investors should look beyond the market downturn before abandoning the sector.
Cramer warned that rising oil prices and interest rates could extend the pullback. However, he argued that the broad-based sell-off is masking the underlying strength of semiconductor demand, which helped drive the sector's impressive rally earlier this year.
Despite the recent selloff, SOXX is up about 60% this year, meaning the recent plunge can be a good entry point.
Real-World Devices Highlight Growing Chip Demand
Cramer believes investors may be overlooking how deeply semiconductors are becoming embedded in everyday products. Sophisticated products increasingly require more computing power and memory, creating fresh opportunities for semiconductor manufacturers.
Cramer encouraged investors to examine how chips are being used in real-world applications. His argument is that the expanding range of AI-powered applications could continue to support chip demand.
Cramer pointed to Micron Technology (MU - Free Report) as an example of a semiconductor company whose business fundamentals may be getting overshadowed by the broader market sell-off.
The memory-chip maker has benefited from the AI infrastructure build-out, with demand for memory chips significantly outstripping supply. Cramer highlighted Micron's 26 long-term customer agreements, which cover approximately 35% of its revenue through 2030, with negotiations for 2031 already underway.
Intel, AMD & Broadcom Stand to Benefit?
Cramer also highlighted Intel (INTC - Free Report) and Advanced Micro Devices (AM - Free Report) D), which supply central processing units (CPUs) used across a wide range of computing devices and machines, as mentioned on CNBC.
Meanwhile, Broadcom AVGO expects AI-chip revenues of about $115 billion in fiscal 2027, up from its earlier forecast of more than $100 billion. It expects the figure to reach $230 billion in fiscal 2028. However, Broadcom shares look pricey at the current level.
ASML Points to Extended Order Book
ASML reported on Oct. 14 that customers were showing interest in orders extending into 2029 and 2030. The company plans to expand capacity for its advanced lithography machines, reflecting chipmakers’ continuing investment in production.
Note that ASML is the only company in the world that produces extreme ultraviolet lithography machines, a key tool used by the likes of TSMC, per CNBC.
Growth Trajectory of Chip Revenues
Gartner's late-August 2026 forecast puts global semiconductor revenue at approximately $1.94 trillion in 2027, up from $809 billion in 2025. Gartner expects memory revenues to exceed $1 trillion in 2027, while non-memory semiconductor revenues are projected to reach $864 billion.
Global semiconductor revenues are expected to reach $1.6 trillion in 2026, up 92% year over year. Memory revenues are expected to hit $837.3 billion while nonmemory revenues are likely to hit $718.0 billion.
Inside Hyperscalers' Spending
Major cloud providers continue to invest heavily in AI infrastructure. McKinsey estimates that five major hyperscalers have planned capital expenditure of approximately $1 trillion for 2027 (up from about $800 billion in 2026), with most directed toward AI infrastructure. This supports demand for GPUs, custom AI chips and networking components.
TrendForce expects high-bandwidth memory (HBM) supply constraints to persist and forecasts a 121% year-over-year increase in blended HBM selling prices in 2027.
Wall of Worry
Cramer acknowledged that the sector could experience additional losses after its substantial gains earlier in the year. Rising interest rates, higher energy costs and market volatility could continue to weigh on valuations, even when individual companies have solid business prospects.
ETFs in Focus
There are many semiconductor ETFs in the market, with SOXX trading at a P/E(ttm) of 30.63X. Another popular ETF, VanEck Semiconductor ETF (SMH - Free Report) , trades at a P/E (ttm) of 30.26X.
First Trust Nasdaq Semiconductor ETF (FTXL - Free Report) trades at P/E (ttm) of 29.95X. Global X AI Semiconductor & Quantum ETF (CHPX - Free Report) trades at an even lower P/E of 25.55X.
View the Zacks #1 Rank List
Image: Bigstock
Buy the Dip in Semiconductor Stocks & ETFs?
Key Takeaways
Semiconductor stocks have faced heavy selling pressure in recent sessions, withiShares Semiconductor ETF (SOXX - Free Report) plunging about 12% over the past five days (as of Oct. 15, 2026) (at the time of writing), due to rising rate worries. But CNBC's Jim Cramer believes investors should look beyond the market downturn before abandoning the sector.
Cramer warned that rising oil prices and interest rates could extend the pullback. However, he argued that the broad-based sell-off is masking the underlying strength of semiconductor demand, which helped drive the sector's impressive rally earlier this year.
Despite the recent selloff, SOXX is up about 60% this year, meaning the recent plunge can be a good entry point.
Real-World Devices Highlight Growing Chip Demand
Cramer believes investors may be overlooking how deeply semiconductors are becoming embedded in everyday products. Sophisticated products increasingly require more computing power and memory, creating fresh opportunities for semiconductor manufacturers.
Cramer encouraged investors to examine how chips are being used in real-world applications. His argument is that the expanding range of AI-powered applications could continue to support chip demand.
Micron's Long-Term Contracts Offer Revenue Visibility
Cramer pointed to Micron Technology (MU - Free Report) as an example of a semiconductor company whose business fundamentals may be getting overshadowed by the broader market sell-off.
The memory-chip maker has benefited from the AI infrastructure build-out, with demand for memory chips significantly outstripping supply. Cramer highlighted Micron's 26 long-term customer agreements, which cover approximately 35% of its revenue through 2030, with negotiations for 2031 already underway.
Intel, AMD & Broadcom Stand to Benefit?
Cramer also highlighted Intel (INTC - Free Report) and Advanced Micro Devices (AM - Free Report) D), which supply central processing units (CPUs) used across a wide range of computing devices and machines, as mentioned on CNBC.
Meanwhile, Broadcom AVGO expects AI-chip revenues of about $115 billion in fiscal 2027, up from its earlier forecast of more than $100 billion. It expects the figure to reach $230 billion in fiscal 2028. However, Broadcom shares look pricey at the current level.
ASML Points to Extended Order Book
ASML reported on Oct. 14 that customers were showing interest in orders extending into 2029 and 2030. The company plans to expand capacity for its advanced lithography machines, reflecting chipmakers’ continuing investment in production.
Note that ASML is the only company in the world that produces extreme ultraviolet lithography machines, a key tool used by the likes of TSMC, per CNBC.
Growth Trajectory of Chip Revenues
Gartner's late-August 2026 forecast puts global semiconductor revenue at approximately $1.94 trillion in 2027, up from $809 billion in 2025. Gartner expects memory revenues to exceed $1 trillion in 2027, while non-memory semiconductor revenues are projected to reach $864 billion.
Global semiconductor revenues are expected to reach $1.6 trillion in 2026, up 92% year over year. Memory revenues are expected to hit $837.3 billion while nonmemory revenues are likely to hit $718.0 billion.
Inside Hyperscalers' Spending
Major cloud providers continue to invest heavily in AI infrastructure. McKinsey estimates that five major hyperscalers have planned capital expenditure of approximately $1 trillion for 2027 (up from about $800 billion in 2026), with most directed toward AI infrastructure. This supports demand for GPUs, custom AI chips and networking components.
TrendForce expects high-bandwidth memory (HBM) supply constraints to persist and forecasts a 121% year-over-year increase in blended HBM selling prices in 2027.
Wall of Worry
Cramer acknowledged that the sector could experience additional losses after its substantial gains earlier in the year. Rising interest rates, higher energy costs and market volatility could continue to weigh on valuations, even when individual companies have solid business prospects.
ETFs in Focus
There are many semiconductor ETFs in the market, with SOXX trading at a P/E(ttm) of 30.63X. Another popular ETF, VanEck Semiconductor ETF (SMH - Free Report) , trades at a P/E (ttm) of 30.26X.
First Trust Nasdaq Semiconductor ETF (FTXL - Free Report) trades at P/E (ttm) of 29.95X. Global X AI Semiconductor & Quantum ETF (CHPX - Free Report) trades at an even lower P/E of 25.55X.