Pete Carmino of Chicken Analytics argues that AI infrastructure and semiconductor equipment names still have room to run even after big moves, because capital spending, tax incentives, and data-center buildouts remain supportive. He uses Applied Materials as a case study and highlights Onto Innovation, AMD, and ON Semiconductor as momentum stocks that may still be early in their next leg up.
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This transcript is a bullish, momentum-focused pitch on three AI-adjacent stocks: Onto Innovation, AMD, and ON Semiconductor, framed through the lens of an earlier successful call in Applied Materials (AMAT). Pete Carmino’s core thesis is that the AI trade is not finished just because popular names have already run; instead, the supporting infrastructure and equipment layer still has “room to run,” especially when capital expenditure keeps growing and policy incentives make spending easier for large customers. He starts by using Applied Materials as a case study. The claim is that AMAT was already strong when he discussed it in October, but it still climbed roughly another 100 points afterward, validating the idea that a stock can continue higher even when it already looks extended. …
Near term, the actionable setup is to respect relative strength in AI infrastructure names while expecting choppy tape from tariffs and geopolitics. Extended entries are risky, so the cleanest short-term read is to use pullbacks or smaller sizing rather than chase indiscriminately.
Over the next few months, the base case is continued support for semicap equipment, testers, and power-semiconductor names if hyperscaler capex stays elevated and earnings guidance confirms it. A sustained slowdown in AI spend or a failure to hold breakouts would be the main reasons to reconsider.
Structurally, the transcript argues that AI buildout is still early enough to support a broader semiconductor ecosystem, not just the flagship GPU makers. If that regime persists, leadership should keep rotating down the supply chain as more stages of the data-center cycle mature.
AI-related capital expenditure will continue growing, reaching $500-550 billion this year.
Speaker cites hyperscaler spending trends and tax incentives (bonus depreciation) as drivers of sustained capex growth.
Applied Materials (AMAT) still has further upside even after rallying from $220 to the $320s.
The speaker argues AI tailwinds and capital expenditure trends continue to push equipment names higher.
Onto Innovation (ONTO) is set to benefit from increased semiconductor manufacturing, similar to Applied Materials' earlier setup.
Speaker draws a historical analogy to AMAT's October setup, noting ONTO's relationship with TSMC and role testing chips.
What should investors be thinking about when getting into the AI market, especially regarding analysts' valuations and whether the market is catching up with how rapid demand is growing?
Pete says analysts tend to be conservative and may call names 'overbought' or 'crowded trades,' but the investment trends are massive — over $400 billion in AI capex last year, growing to $500-550 billion this year — and permanent 100% bonus depreciation tax incentives from the 'big beautiful bill' make monetizing data centers easier. So unless those incentives change, capex should keep growing.
Do you see the current market volatility from tariff fears and geopolitical tension as a factor that could slow momentum in these momentum names, and what should investors do?
Pete says volatility equals opportunity. He advises looking at long-term trends and asking 'what do I know for sure?' — what he knows for sure is incentives to spend remain, AI is growing, and we're in early stages. He recommends using technical indicators and sifting through noise versus signal.
Where does ON Semiconductor fit into the cycle of the data center buildup happening in the country right now?
Pete says ON is toward the end of the data center build — in the power semiconductor layer that lags GPU orders by about a phase, somewhere between phase two and phase three of a three-phase buildout. He notes the analyst rating trend is a little slow, which he sees as future opportunity if upgrades start coming, and that ON should get better visibility into 2026 as data centers get completed.
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