The AI Trade Rotation: Money Is Moving Out of Chips and Into This
2026-08-08 07:54
•Keith Speights •The Motley Fool
••••• ••••••• Axe Cap view
Shifting Gears: From Chips to Software in a Rand Context
South African investors should watch the AI-driven rotation from semiconductor to software stocks, with USD/ZAR movements anchoring local opportunities.
The AI trade rotation shaking global markets sees investors moving away from high-flying chipmakers like Intel, whose stretched valuations (trading at nearly 80 times forward earnings) make them vulnerable to a pullback. Meanwhile, software-as-a-service firms—once feared as victims of AI disruption—are now attractively priced, drawing fresh buying. Nvidia remains a standout, balancing strong growth with reasonable valuation, unlike Intel. On the JSE, the story translates into paying close attention to how rand strength or weakness interacts with tech sentiment. A weaker rand tends to aid exporters like Naspers and Prosus, who have large global tech exposure, particularly since their biggest holdings include software companies benefiting from this rotation. This rotation could support Naspers and Prosus if the USD/ZAR holds above 18.50. That said, if global tech sentiment stalls or the rand strengthens sharply, these stocks could face headwinds with earnings pressures mounting. this is just our opinion and not financial advice
Increase exposure to Prosus and Naspers, selectively adding to positions if USD/ZAR remains stable or weakens moderately above 18.50. Avoid Intel given its stretched valuation and trim positions in pure chip plays outside Nvidia. Monitor rand moves closely for tactical adjustments.
- USD/ZAR
- Naspers
- Prosus
- Intel
- Nvidia
- Rapid rand appreciation hurting exporters' rand earnings
- Global tech sell-off pauses or reverses AI rotation
7/10
Investors are rotating money from semiconductor stocks into software stocks in 2026. While chip stocks like Intel have surged over 170% year-to-date, they've become expensive. Meanwhile, software-as-a-service stocks were heavily sold earlier in the year due to AI disruption fears, making them attractive valuations. However, the article advises against abandoning chip stocks entirely, as they continue strong earnings growth and some like Nvidia maintain reasonable valuations.
Our take is based on reporting first published by The Motley Fool.