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In recent decades, the Digital Revolution has eclipsed the Industrial Revolution. Today, AI is a technology that has evolved from this relatively new revolution. We think the result is a technology-led productivity boom that is just starting and could continue through the end of the 2020s and probably into the 2030s.

Here are a few recent related developments:

(1) Semiconductor sales. According to the Semiconductor Industry Association, the three-month moving average of worldwide semiconductor sales rose to a record $55.3 billion during September.

(2) Semiconductor forward earnings. Also rising to new record highs is the forward earnings of the S&P 500 Semiconductor industry. This weekly series is a very good indicator of the monthly worldwide sales series.

(3) Semiconductor stock price index. The S&P 500 Semiconductor stock price index has been rising to record highs along with the industry’s forward earnings, but faster. That’s because during the current bull market, the forward P/E of the industry has almost tripled from about 13 to nearly 30.

(4) Nvidia. Nvidia Corp. (NVDA) shares have been significantly outpacing all the other Magnificent Seven names ever since OpenAI introduced ChatGPT on Nov. 30, 2022 (chart).

Nvidia reported Q3 revenues and earnings after the bell Wednesday. They topped expectations on the strength of sales of its high-powered AI chips, fueling what its CEO Jensen Huang called the “Age of AI.”

Revenue continues to surge at Nvidia, rising 94% on an annual basis during the quarter that ended Oct. 27. That is still a consecutive slowdown from the previous three quarters, when sales rose 122%, 262%, and 265%, respectively.

Then again, the company’s profit margin is over 50%. Meanwhile Elon Musk’s xAI company is raising $6 billion with the intention of purchasing 100,000 Nvidia chips to create a supercomputer that will process lots of Big Data to power other technologies such as self-driving cars and humanoids.

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