Talk of an AI chip peak in 2028 is ‘utterly wrong': CLSA

• AI chip supply is currently 73% undersupplied, with the shortage projected to last until 2030, challenging earlier predictions of a peak in 2028.
• Small Language Models (SLMs) are catching up to LLMs and are expected to drive wider AI adoption, extending demand beyond traditional data centers.
• Upstream semiconductor and hardware companies offer the best investment value due to the deep and worsening supply shortage in AI compute.

The discussion highlights the nascent stage of AI development and a significant, prolonged chip shortage (GPUs, ASICs) expected to last until 2030. It emphasizes the growing importance of Small Language Models (SLMs) for broader AI adoption beyond data centers and identifies upstream semiconductors and hardware as key investment opportunities due to the persistent supply-demand imbalance.