Global AI trade could revive after recent pullback, J.P. Morgan says
SMH•J.P. Morgan analysts said a recent pullback has improved investor positioning and valuations, potentially spurring renewed interest in the global AI trade, particularly semiconductor stocks. They cited strong capital spending and earnings, and said semiconductor supply-demand conditions may remain tight until 2028.
1. AI trade outlook
J.P. Morgan analysts said cleaner investor positioning and lower valuations could support renewed engagement with AI stocks, despite concerns about capital spending and near-term returns. They said capital spending is likely to remain strong and that continued earnings strength and growing evidence of AI monetization could support interest in the sector.
2. Semiconductors favored
The analysts retained a bullish stance on semiconductor stocks, citing healthy fundamentals, pricing growth into 2027 and tight supply-demand conditions likely to persist until 2028. They said a semiconductors-versus-software pair trade should be re-entered, while noting that they do not view software as a good outright short.
3. Index performance
The MSCI World Semiconductors and Semiconductor Equipment Index has risen about 48% so far this year, while the MSCI World Software and Services Index has gained 1.3%.
