JPMorgan Chase: Semiconductor Stock Weakness Should Be Seen as Buying Opportunity, Upside Cycle Far from Over

BlockBeats News, July 7th - A J.P. Morgan strategist stated that the recent weakness in semiconductor stocks should be seen as a buying opportunity, as the chip upcycle is far from over, and significant additional supply may not materialize until 2028.

The bank pointed out that the SOX semiconductor index fell by about 5.4% during the shortened trading week before the Independence Day holiday and has fallen for the second consecutive week. However, the sector quickly rebounded on Monday, with storage-related stocks such as Marvell, Broadcom, Western Digital, and Seagate leading the gains, indicating that funds are still willing to flow back into the AI hardware chain. J.P. Morgan's view is not entirely bullish on the AI concept. The bank prefers the semiconductor and infrastructure sectors, while remaining cautious about the so-called "AI cannibalization" area, which refers to industries that may be replaced by AI, leading to price erosion or margin compression.

Sectors heavily affected include software, business services, and media. In other words, J.P. Morgan believes that AI will still create winners, but not all companies tied to AI will necessarily benefit; the hardware supply side offers more certainty in the short term compared to some application and service companies.