JPMorgan Chase: Semiconductor stock weakness should be viewed as an opportunity to add positions, as the uptrend cycle is not near its end.

JPMorgan strategists say the recent weakness in semiconductor stocks should be viewed as a buying opportunity, as the chip upcycle is far from over, with meaningful new supply not expected to arrive until 2028. The bank noted that the SOX Semiconductor Index fell roughly 5.4% in the shortened trading week ahead of Independence Day, marking its second consecutive weekly decline. However, the sector rebounded sharply on Monday, with storage-related stocks including Marvell, Broadcom, Western Digital, and Seagate leading gains, showing that capital remains willing to flow back into the AI hardware chain. JPMorgan’s view is not a broad bullish stance on all AI concepts. The bank favors semiconductors and infrastructure, while remaining cautious on the so-called “AI cannibalization” sectors—industries that could be displaced by AI, face downward pricing pressure, or see eroding profit margins. Hardest-hit sectors include software, business services, and media. In other words, JPMorgan believes AI will still create winners, but not necessarily all companies tied to AI will benefit; hardware suppliers offer more near-term certainty than some application and service firms.