JP Morgan strategists said that AI-related stocks are unlikely to be under pressure for a long time, and strong earnings growth and improved valuations are expected to re-stimulate demand, especially for semiconductor companies
JP Morgan strategists said that AI-related stocks are unlikely to be under pressure for a long time, and strong earnings growth and improved valuations are expected to re-stimulate demand, especially for semiconductor companies. Semiconductor stocks have become disconnected from improving earnings prospects, the team led by Mislav Matejka noted in a report. The report said that substantial supply growth will not occur until 2028, so it is too early to reflect the semiconductor price inflection point into the market. Fundamentals are likely to remain constructive, the report said. The relative strength index for these chip stocks is quickly approaching oversold territory, and strategists say investors should "reenter the sector over the summer" if capital spending expectations from hyperscale data center operators remain strong. (Bloomberg)