2027 could potentially be a peak for semiconductors – Goldman Sachs' Delta One

What happened

Goldman Sachs' Delta One desk says worry about capital spending is extremely high, with semiconductor valuations falling to levels not seen in years. The Philadelphia Semiconductor Index trades near 12.16x forward earnings, near 2022 lows, while Nvidia sits at 10x, its lowest multiple since 2013.

Confirmed

Global impact / market context

Lower valuation multiples mean investors pay less for each dollar of expected future profit, showing doubt that chip demand will keep growing. The desk links this to rising costs of borrowing money and limited balance sheet capacity, which can slow factory construction and equipment orders, pressuring revenue for chipmakers and suppliers.

Analyst inference

The desk compares today with the late 1990s tech era, when capacity was built before enough use existed. It stays bullish on untapped use cases such as robotics and enterprise workflow automation, which means automating business tasks, but accepts that debt market limits are real and binding.

Analyst inference

What to watch

1. Forward earnings multiples for the Philadelphia Semiconductor Index and Nvidia, since they are near multi-year lows and show how much expected profit growth investors still price in. Confirmed
2. Watch whether companies slow or delay announced factory and equipment spending plans, which would test the desk's warning that 2027 could potentially be a peak for semiconductors. Proposed
3. Track borrowing costs and corporate balance sheet capacity, because tighter debt markets could limit financing for chip buildouts and turn valuation doubts into actual cuts to spending plans. Analyst inference

Evidence

• seekingalpha.com