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JPMorgan says semiconductor fundamentals may stay constructive as chip routs
JPMorgan expects meaningful supply additions to be delayed until 2028, arguing it is too early to price in an earnings inflection if hyperscaler capex guidance holds up.
Semiconductor stocks have sold off sharply this summer amid worries that the AI spending boom is cooling, but JPMorgan is pushing back by emphasizing what it calls still-strong fundamentals. The firm said it believes semiconductors will find a floor as earnings delivery remains strong.
JPMorgan strategist Mislav Matejka noted that meaningful supply additions are not due before 2028, adding that investors may be moving too quickly by pricing in an inflection before it is visible. The bank also pointed to hyperscalers, saying if their capex guidance remains strong, investors should consider stepping back into the space.
The sell-off has been broad, with the iShares Semiconductor ETF down 13% over the past month. The pressure reflects concerns ranging from potential export restrictions and tariffs to broader geopolitical tensions that could disrupt chip sales to key markets.
The article also cites recent chatter that low-cost AI model launches from China may challenge assumptions about US tech firms overspending on AI, alongside Barclays warnings that AI capex enthusiasm is beginning to cool. It further notes that the memory chip sector has been especially hit, with Micron down from its highs by a market-cap loss of about $350 billion, and other major names including Sandisk, Intel, Applied Materials, and Lam Research each down more than $100 billion, according to the report.