Bernstein's analyst Stacy Rasgon said the semiconductor sector is seeing unprecedented AI-driven growth.

At the same time, he remains cautious on select stocks, such as Intel Corp (NASDAQ:INTC) and QUALCOMM Inc (NASDAQ:QCOM), despite improving fundamentals.

AI Boom Drives Historic Industry Expansion

Rasgon told CNBC on Monday that the chip industry is experiencing growth on a scale he has "never seen" in nearly two decades, driven largely by demand for AI.

He noted the sector is on track for multiple consecutive years of expansion—historically rare—and highlighted surging revenues, including roughly 60% year-over-year growth recently, largely driven by memory pricing.

Rasgon added that AI is pushing the industry through successive capacity constraints across accelerators, memory, optical components, semiconductor equipment and CPUs, calling it a sign that "we're just getting started" as usage shifts from training to real-world inference.

Skepticism On Intel's Valuation

Rasgon acknowledged that Intel's server CPU business is benefiting from AI-related demand and that fundamentals are improving, with CEO Pat Gelsinger "winning hearts and minds."

However, he said "it's hard to justify where it is" at current stock levels, arguing that the valuation already prices in significant success in both its core business and future foundry ambitions."

"While the company cited improving yields in newer process nodes, Rasgon cautioned that margins suggest those gains remain limited and that "there's a lot of wood to chop still."

QUALCOMM Faces Macro Headwinds

Rasgon said QUALCOMM is executing well operationally but is "kind of living in a bad neighborhood," pointing to weak smartphone demand as a key overhang.

He expects memory pricing to pressure handset shipments, especially in the second half, and said prior expectations for the business were too high.

While he acknowledged potential upside from new products and AI-related developments, he suggested broader smartphone market weakness continues to weigh on investor sentiment.

Price Action: Qualcomm shares were up 0.29% at $150.69, and Intel shares were down 0.74% at $84.36 at the time of publication on Tuesday, according to Benzinga Pro data.

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