JPMorgan: Semiconductors are nearing oversold levels; it recommends staged positioning in the summer.

Deep Tide TechFlow news. On July 21, according to Chaoxi Research, a stock strategy report from JPMorgan Chase on July 20 stated that in the past few weeks, AI-related stocks have been hit by a severe sell-off. The South Korean stock market has fallen 25% from its peak, the Philadelphia Semiconductor Index has dropped 20%, and individual stocks such as Samsung and Micron have declined between 20% and 50%. The report believes the core drivers behind this round of declines are technical factors and position unwinding, while fundamentals have not deteriorated. The gap between semiconductor relative price trends and relative earnings trends continues to widen, but the tight balance between DRAM and NAND supply and demand is expected to persist through 2028. DRAM spot prices remain at high levels, and Micron has also raised its earnings guidance; it expects supply-and-demand tightness to continue at least through 2027. The RSI of the Philadelphia Semiconductor Index is approaching the oversold range, and the year-to-date momentum gains have essentially been given back.

JPMorgan’s view is that once oversold signals are confirmed, a rebound window will open accordingly. It recommends that investors build semiconductor positions in batches during the summer. The proportion of Q2 earnings reports that beat expectations was 97%. On the day earnings releases from S&P 500 companies that beat expectations, they averaged outperformed the broader market by 1.7 percentage points. In terms of allocation, JPMorgan raised its equity allocation from 60% to 65%, increased its euro-zone weighting from 8.7% to 11%, and at the sector level overweights semiconductors, mining, capital goods, automobiles, insurance, and banks, while underweighting the “AI-supplemented/consumed” group such as software, business services, and media. On geopolitical tensions, the report believes the “buy the dip” strategy since the end of March remains effective.