RBC Capital Markets has initiated coverage of the semiconductor sector with a neutral stance, advising a more balanced approach. The firm believes that the initial AI-driven rally is cooling off. While acknowledging concerns about a potential bubble, RBC still anticipates robust hyperscale capital spending over the next 18-24 months due to competition and improving monetization trends.

However, RBC notes emerging infrastructure bottlenecks and potential project delays. The firm anticipates a gradual spending slowdown rather than an abrupt one. They see sustained demand in PC, smartphone, and industrial sectors, with lean channel inventories. RBC projects the broader semiconductor industry to grow over 20% in 2026, primarily driven by data center demand, with another strong year possible in 2027.

One area of focus is high-bandwidth memory (HBM), which RBC views as a transformative driver, expecting over 40% growth through 2028. This is fueled by memory-intensive AI workloads and the transition to HBM4. Within semicap equipment, RBC anticipates upward pressure on wafer fab equipment spending, supported by advanced logic, memory, and packaging.

In this environment, RBC initiated coverage on nine stocks with Outperform ratings, while assigning Sector Perform ratings to several others. This cautious outlook reflects a market at a potential inflection point. Investors should watch how quickly the cooling AI demand impacts the broader sector and the performance of individual stocks. It'll be interesting to see how the market reacts to these new ratings.