Every artificial intelligence company may want the race to slow down. None can afford to be the first to stop running.
That is Bank of America’s answer to Monday’s AI-driven sell-off.
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Semiconductor and AI-related stocks sank Monday after Anthropic CEO Dario Amodei published a weekend essay urging the industry to slow the pace of frontier model development, with OpenAI CEO Sam Altman and Elon Musk backing him.
Yet, Bank of America semiconductor analyst Vivek Arya said investors are focusing on the wrong variable.
The key question is not whether AI executives want more restraint. It is whether commercial and geopolitical competition will allow it.
Arya described the controversy as “noise” within a “secular bull market” that could push annual AI capital spending above $3 trillion by 2030.
“Recent frontier-lab controversy, including OpenAI’s Hugging Face incident, high-profile Anthropic researcher departures, and Dario Amodei’s public appeal for industry restraint, has intensified debate around AI’s pace. We view these events as noise relative to a secular market where AI-capex could surge 3x to $3tn+ by decade-end,” Arya said.
Rivalry Is the Variable, Not Regulation
Arya frames AI as a prisoner’s dilemma.
Every participant could benefit if the entire industry advanced more carefully. But any company that slows alone risks surrendering customers, talent and technological leadership to competitors.
The same logic operates across several fronts.
American labs are competing against Chinese developers. Hyperscalers are racing against specialized cloud providers. Governments are funding sovereign AI systems, while OpenAI, Anthropic and other laboratories pursue increasingly powerful models.
The economic prize is too large for any participant to trust that its rivals will voluntarily wait.
Everyone wants the brakes. Nobody wants to touch them first.
That makes a coordinated slowdown possible in theory but difficult in practice.
Even new safety agreements may alter how AI systems are developed without reducing the infrastructure required to build them.
Physical Demand Is Still Accelerating
Arya’s strongest evidence comes from infrastructure utilization rather than executive commentary.
AI network capacity is operating near 100%, while rental prices are rising even for older-generation accelerators.
That is important because aging technology typically becomes cheaper as newer products enter the market. Rising prices for old chips instead suggest demand still exceeds available supply.
This physical evidence conflicts with the idea that AI investment is already cooling.
The market is effectively pricing a future spending slowdown while current infrastructure remains fully utilized.
Valuation Becomes the Real Argument
The Philadelphia Semiconductor Index has gained 67% in 2026. Yet Arya said the group trades at about 19 times forward earnings, broadly matching the S&P 500.
The difference is growth.
Semiconductor earnings have risen 139% from a year earlier, roughly seven times faster than the broader market.
Looking 24 months ahead, Arya values the chip index at 14.8 times earnings. That represents an 11% discount to the S&P 500 despite projected growth of about 30%.
The index has also corrected roughly 17% after nearly doubling during the first half.
In Arya’s view, that combination leaves chip valuations reflecting far more skepticism than the industry’s earnings outlook warrants.
BofA’s Preferred Semiconductor Stocks
“We remain bullish on semis, though we expect near-term volatility from rates, Mideast tensions, the Nov. 2 U.S. midterms, and growing resistance to data center expansion,” Arya said.
The expert expects compute, networking and analog semiconductor companies to remain more resilient. Memory and chip-equipment stocks could recover later when momentum improves.
Monday’s sell-off assumes a debate over AI safety can stop the AI spending race.
Yet, until every participant agrees to slow down simultaneously, none of them can afford to do it.
| Company | Price | Day | Bank of America’s PO | Implied Upside |
|---|---|---|---|---|
| Micron Technology Inc. (NASDAQ:MU) | $913.93 | -6.3% | $1,550 | +69.6% |
| Marvell Technology Inc. (NASDAQ:MRVL) | $218.85 | -7.3% | $365 | +66.8% |
| On Semi (NASDAQ:ON) | $72.14 | -5.3% | $120 | +66.4% |
| NVIDIA Corp. (NASDAQ:NVDA) | $210.57 | -3.5% | $350 | +66.2% |
| Intel Corp. (NASDAQ:INTC) | $96.53 | -6.2% | $145 | +50.2% |
| Lam Research Corp. (NASDAQ:LRCX) | $277.63 | -6.9% | $385 | +38.7% |
| Analog Devices Inc. (NASDAQ:ADI) | $360.85 | -4.7% | $500 | +38.6% |
| Advanced Micro Devices Inc. (NASDAQ:AMD) | $483.20 | -6.4% | $620 | +28.3% |
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