Investing.com -- Northland downgraded several semiconductor stocks to Market Perform on Tuesday, citing concerns about supply chain disruptions and declining artificial intelligence infrastructure spending.

The firm downgraded Astera Labs (NASDAQ: ALAB), Intel (NASDAQ: INTC), and Semtech (NASDAQ: SMTC) to Market Perform, stating that semiconductor stocks are priced for perfection and face elevated risks over the next two quarters.

Northland expects AI infrastructure spending to decline in 2027 as hyperscalers are spending roughly 100% of cash from operations. Since the start of last year, hyperscalers have raised $260 billion in debt, while buybacks collapsed during the most recent quarter.

The firm noted that sovereign wealth funds in the Middle East are facing cash flow problems due to the war in Iran.

OpenAI and Anthropic are going public this year and are demonstrating greater financial discipline by shifting from unlimited free usage to usage caps, token-based pricing, and higher-tier subscriptions. One company Northland spoke with is restricting the use of tokens by its software engineers due to cost.

Training costs for new AI models have risen by an estimated 4,300% since 2020, according to the firm. AI inference with newer transformers is more costly and computationally intensive than with older CNNs.

Northland warned that a very strong El Niño, potentially a Super El Niño, is forecast to begin in June. According to the Harvard Business Review, 80% of all sites in the United States and 48% in China and Taiwan have either no business continuity plans or no alternative sites ready for quick operation.

Rolling blackouts and power outages in the Philippines and Malaysia are impacting assembly and test houses. Intel's biggest advanced packaging plants are located in Ho Chi Minh City, Vietnam, and Penang, Malaysia.

In Taiwan, the government is only allowing TSMC to have limited water and electricity access. As a result, TSMC is reducing output of older technologies.