JPMorgan Sees 15% Chip Dip Bargains While Morgan Stanley Prefers 10% Software Overweight
MS•JPMorgan’s equity team recommends a 7% overweight in AI-focused chipmakers such as Nvidia and AMD after a 15% pullback, viewing the sector as undervalued. Morgan Stanley’s tech analysts instead advise allocating 10% of technology portfolios to software and cloud leaders like Microsoft and Alphabet.
1. JPMorgan’s Chip Overweight Call
JPMorgan’s equity analysts lifted their semiconductor sector weight to 7%, citing a recent 15% pullback in leading chipmakers as an attractive entry point. They highlighted Nvidia and AMD as beneficiaries of sustained AI infrastructure spending and expect margin expansion through year-end.
2. Morgan Stanley’s Software Focus
Morgan Stanley’s technology research team recommends a 10% allocation to software and cloud services, favouring Microsoft and Alphabet for their recurring-revenue business models. They argue software platforms will capture the bulk of generative AI economics over pure-play hardware providers.
3. Implications for Market Rotation
The contrasting calls underscore a potential rotation between hardware and software plays in the tech sector. Investors may adjust exposures based on differing views of AI adoption timelines and margin profiles, influencing near-term sector performance.
