JPMorgan said in a July 20 equity strategy report that AI-related stocks have been hit by heavy selling in recent weeks, according to Chaoxiang Research as cited by ChainCatcher. South Korean equities have fallen 25% from their peak, the Philadelphia Semiconductor Index is down 20%, and individual names such as Samsung and Micron have dropped between 20% and 50%.
The bank said the main force behind the decline has been technical pressure and position clearing, while fundamentals have not worsened. It added that the gap between semiconductor relative prices and relative earnings has continued to widen, but supply and demand in DRAM and NAND are expected to stay tightly balanced through 2028. Spot DRAM prices remain elevated, and Micron has also raised its guidance, leading JPMorgan to judge that supply tightness will last at least through 2027.
On technical indicators, the report said the Philadelphia Semiconductor Index RSI is close to oversold territory, with most of this year’s momentum gains now erased. JPMorgan said that once an oversold signal is confirmed, a rebound window could open, and it recommended that investors build semiconductor exposure gradually over the summer.
On earnings, the report said 97% of second-quarter results have beaten expectations. Among S&P 500 companies that topped forecasts, the average stock outperformed the broader market by 1.7 percentage points on the day earnings were released.
In asset allocation, JPMorgan raised its equity weighting to 65% from 60% and lifted its eurozone allocation to 11% from 8.7%. At the sector level, it is overweight semiconductors, mining, capital goods, autos, insurance and banks, while underweight software, business services and media, which it grouped as AI-disruption sectors.
On geopolitical tensions, the report said the buy-the-dip strategy in place since late March remains effective.