C. Valuation and market expectations.
AI chip demand and infrastructure spending can remain exceptionally strong, but stocks trade on the gap between reality and what is already priced in.
A semiconductor company can deliver record revenue and profits yet still fall if growth, margins or guidance disappoint elevated expectations. That becomes especially important after a strong rally, when valuations assume years of continued AI expansion.
I would still watch revenue growth, margins and hyperscaler capex closely, but valuation determines how much good news is already embedded in the share price.
Great company ≠ great investment at every price.
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