JPMorgan Warns AI Stocks Unlikely to Replicate July Rally: Dip-Buying Momentum Fades, Leverage Risks Rise

BlockBeats news, October 15 — JPMorgan strategist Nikolaos Panigirtzoglou pointed out that the October AI stock sell-off may struggle to replicate the rapid rebound seen in July. Compared with before, the current market's willingness to buy the dip has weakened, short positions are insufficient to provide potential covering demand, corporate buyback funds are also declining, and leveraged exposure in ETFs is rebuilding, which could further amplify market volatility. JPMorgan believes that, based on investor positioning and fund flows, AI infrastructure stocks do not yet appear to be in oversold territory.

This round of selling has spread from South Korean memory chip stocks to the U.S. semiconductor sector. SK Hynix and Samsung Electronics have both fallen by nearly one-third over the past month, while the Philadelphia Semiconductor Index has dropped 10% over the past five trading days. In addition, the combined $40 billion share buyback programs previously announced by SK Hynix and Samsung Electronics were completed ahead of schedule in mid-October, meaning the market may lose some of the buying support provided by corporate repurchases.

At the same time, BlackRock CEO Larry Fink warned that if the United States pauses data center construction, the economy could fall into recession. He said a considerable portion of U.S. economic growth is related to AI infrastructure capital expenditure. As market doubts deepen over AI investment returns and corporate profitability, a stock price correction across the AI supply chain could also affect data center construction, energy infrastructure, and related employment areas.