Investors dumping chip stocks hand over fist this summer may be forgetting something important: the strong fundamentals of the underlying companies.
Quick insight: JPMorgan is one of the first sell-side firms to come out bullish in the wake of the chip stock rout
Others could soon follow, given the depth of the sell-off. “We think that semis will find a floor soon on continued strong earnings delivery,” JPMorgan strategist Mislav Matejka said in a note on Monday. “Our view is that fundamentals will likely remain constructive, as meaningful supply additions are not due before 2028, so it would be too early at present to price in an inflection … if hyperscalers capex guidance remains strong, then we think that investors should step back into the space over summer,” Matejka said. The backstory: The closely watched iShares Semiconductor ETF (SOXX) is down 13% in the past month. Semis are under heavy pressure as investors worry that the AI spending boom may be cooling.
The sector has experienced years of extraordinary growth and soaring valuations. But it’s now facing concerns about potential export restrictions, tariffs, and geopolitical tensions that could disrupt chip sales to key international markets. Not helping sentiment is the recent release of the low-cost Kimi K3 model by China’s Moonshot AI.