Semiconductor stocks continue to outperform the broader S&P 500 as strong earnings and artificial intelligence spending drive investor optimism across technology, energy and infrastructure sectors. Companies tied to powering data centres and supporting AI expansion are also benefiting from the broader investment wave.
BNN Bloomberg spoke with Greg Halter, director of research at Carnegie Investment Counsel, about the strength in semiconductor demand, why energy and utility companies are emerging as key AI beneficiaries, and how transportation stocks may be signalling improving economic fundamentals.
Key Takeaways
- Semiconductor stocks have significantly outperformed the S&P 500 this year as demand tied to artificial intelligence infrastructure and chip shortages continues to support earnings growth.
- Strong first-quarter earnings helped offset valuation concerns in technology stocks, with profits across many AI-related companies coming in well above expectations.
- Investors are increasingly focusing on power, utility and infrastructure companies needed to support expanding data centre capacity and AI-related electricity demand.
- Rail and trucking stocks have continued to perform well, which could signal improving business activity and stronger industrial demand ahead.
- Geopolitical tensions and potential supply disruptions remain risks for semiconductor manufacturing and energy markets, although companies have so far avoided major interruptions.
Read the full transcript below:
LINDSAY: Most of the S&P 500 companies have reported a jump in first-quarter profits as investors turn to AI-related names, including chip stocks, which are on pace to extend a rally. In fact, semiconductors have been outperforming the S&P 500 since the start of the year. Let’s find out more. Joining us is Greg Halter, director of research at Carnegie Investment Counsel. Good morning. Great to have you join us.
GREG: Thanks for having me, Lindsay. Nice to be here.
LINDSAY: Yeah, this is interesting to see, what’s been happening with the S&P 500 as well as the rest of the markets. What themes do you see evolving from first-quarter earnings results?
GREG: Well, just in general, the results were incredibly strong, probably double the expectations that were set forth in January, so very, very strong. We have seen quite a bit of interest and performance in the AI-related names. The power and energy names have done very well behind the scenes. People think about Nvidia and so forth, but there are many other companies helping all of this happen, and if we don’t have power, these data centres cannot operate.
LINDSAY: Does that include semiconductors as well? As we mentioned, semiconductors have been outperforming the S&P 500. When it comes to AI, is that another area investors are looking at now?
GREG: Certainly. They’ve certainly been outperforming. That’s probably the understatement of the decade so far, given the performance of some of these stocks. We’re seeing shortages. They’re able to raise prices to almost any level. Stocks are up 10- to 20-fold. It’s kind of getting crazy out there. But you look at someone like Micron, which was going to earn $1 a share, and now I see forecasts for $100 in three years. You’ve never seen anything like this before. That’s certainly helped drive all of this stock price performance.
LINDSAY: And speaking of those chip stocks, they’ve been trending higher. Do you see more room to run here?
GREG: Great question. It’s generally not a space where we as a firm are invested a whole lot. We’re more focused on the energy and power tangential areas, but given momentum, the momentum is very strong right now. So I wouldn’t be surprised if they continue to move higher.
LINDSAY: Do you think tech valuations are stretched a little too high right now?
GREG: No, actually they don’t seem to be on an overall basis. Despite the moves in the tech area, generally the P/Es have not really expanded this year, so earnings are coming through very, very strong, and that is offsetting these valuation concerns at the moment. We also know that technology can change in a hurry, and memory and semis historically have been volatile areas, so we’ll see if that plays out again.
LINDSAY: When it comes to tech, I take your point. You like the power and energy side of things. Are there particular companies or names that you like right now?
GREG: Sure. There are names out there like Eaton, which we like, Vertiv and nVent, and some of the utilities — NextEra Energy, Alliant, LNT is the symbol. There are plenty of good utility stocks as well. A Canadian company called Celestica has done very well and has a play in the area. It’s very broad from that perspective, but again, most people behind the scenes are not really looking at these companies because they’re looking at Nvidia and Oracle and the higher flyers, if you will, or the mega-cap companies. But there’s so much behind the scenes powering all of this and making it happen.
LINDSAY: When we factor in geopolitical tensions, like what’s happening in the Middle East, and it seems to be prolonged with no peace deal yet, do you think there could be an impact on tech stocks, particularly semiconductor manufacturing or export flows?
GREG: It’s certainly possible. We’ve actually heard for four, five or six weeks that there will be shortages of some of the components needed, including helium, but so far that has not seemed to play out in terms of shortages, or at least no great shortages that I’m aware of at this point. Maybe it will, but somehow, some way, the companies are finding a way to get it done. That is the good thing about capitalism. If you have a product to sell and you can find a way, you’ll get it done.
LINDSAY: If this were to continue for a prolonged period of time, though, do you think we would start to see some challenges? How long can these companies continue to get it done without elevated prices as well?
GREG: It’s a great question, and I’m not sure anyone knows the answer. But prolonged for another three months, six months or a year, that would certainly become a problem from the energy and oil standpoint, where many countries need energy to operate their economies. At some point this does become something that would be tough to recover from. I think we need some sort of resolution in an earlier time frame, if you will.
LINDSAY: Okay, so we talked a lot about tech and semiconductors, but you’re also favouring rail stocks right now, and I wanted to get to that before we wrap up. Why is that? What do you like about that sector?
GREG: The three names particularly would be CSX, NSC and UNP, three rails in the U.S. If you believe that stock prices lead fundamentals, and that seems to be the case here because these stocks have done very well, I think you’re going to see improved business, which frankly has probably lagged for the last three, four or five years. They also have the ability to raise prices and be more efficient than trucking. On that score, truckers have actually done very well too. Again, if you believe stock prices lead fundamentals, then something good behind the scenes is happening in terms of revenues and earnings.
LINDSAY: What about the upcoming CUSMA negotiations? I’m not sure if this is a bit of a stretch, but would more friction in trade between Canada, the U.S. and Mexico potentially change things?
GREG: It could, but we’ve been talking about trade and tariffs for over a year now, and it’s amazing how this has become kind of a Teflon market for some of these sectors and stocks. They just seem to be sloughing it off. I don’t know exactly what that tells you, but it seems to be an optimistic viewpoint from the stock market at least.
LINDSAY: For sure. Okay, we’ll leave it there. Greg Halter, director of research at Carnegie Investment Counsel. Great to have you today. Thanks for joining us.
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This BNN Bloomberg summary and transcript of the May 26, 2026 interview with Greg Halter are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
