JPMorgan strategist Mislav Matejka views the recent weakness in semiconductor stocks as a buying opportunity, asserting that the semis upcycle is not nearing its peak and significant supply increases are unlikely before 2028. Matejka's firm prioritizes "semis over hyperscalers over AI at risk plays" for technology positioning. He also suggests that the unwinding of the Iran conflict's market impact, including oil prices and inflation expectations, will be a key catalyst for the second half of 2026.
Matejka anticipates that global equities will reach fresh highs in the second half of 2026, supported by strong earnings, easing inflation, and lighter investor positioning. He clarifies that AI is "unlikely to be the only story in town" in the latter half of the year, expecting small caps, cyclicals, and international markets to benefit from broadening market participation. While bullish on chips, Matejka expresses caution regarding the "Magnificent Seven" tech companies, foreseeing potential "derating continuing on monetization fears."
Bank of America also views the recent dip in the semiconductor industry as a short-term reset rather than a sustained decline in AI demand. BofA projects a substantial expansion in global cloud and AI infrastructure capital expenditures, forecasting spending to reach $1.5 trillion by 2027, representing a 40% to 50% year-over-year increase. They specifically recommend lower-beta semiconductor names like NVDA, TXN, ADI, CDNS, and SNPS to lead the market recovery.
In related news, US stocks have seen declines, with the S&P 500 Index dropping 0.1% and the Nasdaq 100 closing down 0.4%, largely due to a pullback in chipmakers and tech stocks. This follows a period where the S&P 500 rallied to all-time highs, gaining 0.6%, and the Nasdaq 100 jumped 1% in May, amidst tightening supply for global memory chips critical for AI infrastructure.
Matejka advises investors to use any dips caused by adverse geopolitical headlines as opportunities to add to their positions. He remains "fundamentally bearish on AI cannibalisation trades," such as certain software, business services, and media companies, although he acknowledges that tactical bounces are possible if these groups become oversold.
