Deep Tide TechFlow message. On July 20, JPMorgan strategists said AI-related stocks are unlikely to face prolonged pressure, and they expect strong earnings growth and valuation improvement to rekindle demand—especially among semiconductor companies.

In a report led by a team headed by Mislav Matejka, the team pointed out that semiconductor stocks have become disconnected from improving earnings outlooks. The report said that substantial supply growth will not arrive until 2028, so it may be “too early” to have the market fully reflect a semiconductor price inflection point right now; fundamentals may still remain constructive, and the relative strength indicators for these chip stocks are rapidly nearing “oversold” territory.

The JPMorgan strategist said that if the capex expectations of hyperscale data center operators remain robust, investors should “re-enter the sector in the summer.”