Société Générale Strategist Analyzes AI Semiconductor Market Rotation
Manish Kabra of Société Générale reports a shift from NVIDIA to other semiconductor stocks amid growing cloud backlogs and cyclical market volatility.
US equity strategist Manish Kabra reports a rotation in the US stock market as investors shift capital from NVIDIA into other semiconductor companies. Kabra notes that while the AI ecosystem continues to be driven by strong demand from hyperscalers, with cloud backlogs increasing from $1.5 trillion to $2.5 trillion, the sector remains subject to historical cyclicality.
Kabra describes semiconductors as a "yo yo index" and suggests that the bottom of the current cycle typically aligns with the Federal Reserve's final interest rate hike. This timeline indicates a strategic positioning window for investors in the first quarter of 2027. He further identifies US Treasury yields as a key signal for the AI trade, stating that yields near 4% are bullish, while yields near 5% suggest a slower growth trajectory for the index.
Beyond the US market, Kabra predicts that Europe will benefit significantly from the AI capital expenditure cycle. He estimates that 20% of global data centers will eventually be located in Europe.
