Mars Finance News, July 3 - According to the report "Flows and Liquidity: The Demand for AI Rotation" published by JPMorgan, semiconductor stocks, i.e., AI chip and memory manufacturers, have consistently and almost steadily outperformed hyperscale cloud providers since last September. This performance gap appears somewhat unsustainable in the long run. The report suggests that since semiconductor trading is essentially part of the broader AI trade, the current divergence has raised market concerns about sustainability. JPMorgan noted that this gap could narrow in two ways. In a positive scenario, as hyperscale cloud providers, AI model providers, and users improve in commercialization, revenue, and profitability, their performance will begin to catch up and gain a larger share of the overall AI value addition. In a negative scenario, if semiconductor outperformance comes at the expense of customers such as hyperscale cloud providers, AI model providers, or end users, it may suppress their willingness to invest in capital expenditures and ultimately create headwinds for demand for semiconductor products. The report pointed out that JPMorgan's internal view leans toward the positive scenario, but the consensus among analysts shows that the growth rate of capital expenditures for hyperscale cloud providers will slow significantly starting next year. If this expectation holds, it would be closer to the negative scenario. The report stated that hyperscale cloud providers' capital expenditure growth rate is expected to reach 100% in 2026, but may drop to 22% in 2027 and further to 7% in 2028; if this slowdown path is confirmed, semiconductor trades may face significant pressure and trigger a more pronounced and sustained correction in AI trades in both equity and bond markets. JPMorgan also said that the future price of AI computing power will be key to whether hyperscale cloud providers can commercialize their AI capital expenditures. The higher the computing power price, the better their ability to maintain or improve profit margins. In addition, the report stated that the rate of money creation in the United States is expected to increase from $1.6 trillion in 2025 to $1.8 trillion in 2026, which will still provide support for U.S. financial assets, especially U.S. stocks.

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JPMorgan: Semiconductor stocks continue to outperform cloud service providers, which may be difficult to sustain, and AI trading may see sector rotation.

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