On July 3, JPMorgan released a report titled 'Capital Flows and Liquidity: Demand for AI Rotation,' indicating that since September of last year, semiconductor stocks, specifically AI chip and storage manufacturers, have consistently and almost steadily outperformed large-scale cloud service providers. However, this performance gap appears somewhat unsustainable in the long term. The report suggests that since semiconductor trading is essentially part of a broader AI trading landscape, the current divergence raises market concerns about sustainability. JPMorgan stated that this gap could narrow in two ways. The optimistic scenario is that as large-scale cloud service providers, AI model suppliers, and users improve in commercialization, revenue, and profitability, their performance begins to catch up, gaining a larger share of the overall AI value. The pessimistic scenario, however, is that if semiconductors continue to outperform at the expense of large-scale cloud service providers, AI model suppliers, or end users, it could depress their willingness to invest in capital expenditures, ultimately creating resistance to demand for semiconductor products. The report notes that JPMorgan's internal view leans towards the optimistic scenario, but consensus expectations among analysts indicate that the growth rate of capital expenditures for large-scale cloud service providers will significantly slow starting next year, which aligns more closely with the pessimistic scenario. The report forecasts that the capital expenditure growth rate for large-scale cloud service providers will reach 100% in 2026, but may drop to 22% in 2027 and further decline to 7% in 2028. If this slowdown trajectory is validated, semiconductor trading could face significant pressure, leading to more pronounced and sustained corrections in AI trading within equity and debt markets. JPMorgan also stated that the future pricing of AI computing power will be crucial for large-scale cloud service providers in commercializing AI capital expenditures. The higher the computing power prices, the more capable cloud service providers will be in maintaining or increasing profit margins. Additionally, the report predicts that the pace of money creation in the U.S. is expected to rise from $1.6 trillion in 2025 to $1.8 trillion in 2026, which will continue to support U.S. financial assets, particularly U.S. stocks.

ON-1.93%

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

Reward
like
Comment
Repost
Share

Comment

Add a comment

No comments

Trending Topics
View More
#
PredictWorldCup🇳🇴vs🏴󠁧󠁢󠁥󠁮󠁧󠁿
322.46K Popularity
#
USIranWarCloudsGather
3.99M Popularity
#
GUSDYieldRisesto3.8%
891.95K Popularity
#
WorldCupChampionPrediction
184.62K Popularity
#
SKHynixADRIndicativePrice149
264.48K Popularity

Pinned

Sitemap

JPMorgan: Semiconductor Stocks May Struggle to Outperform Cloud Providers, AI Trading May See Sector Rotation

Trending Topics

PredictWorldCup🇳🇴vs🏴󠁧󠁢󠁥󠁮󠁧󠁿

USIranWarCloudsGather

GUSDYieldRisesto3.8%

WorldCupChampionPrediction

SKHynixADRIndicativePrice149

Pinned