Semiconductor stocks have faced heavy selling in recent weeks. The Philadelphia Semiconductor Index (SOX) has fallen about 20% from its recent high. Several AI-linked stocks are also down sharply from their peaks. Still, JPMorgan (JPM) does not expect the weakness to last.
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Chip stocks are rebounding in Monday’s pre-market trading. Nvidia (NVDA), Advanced Micro Devices (AMD), Intel (INTC), Micron (MU), and SanDisk (SNDK) are all trading higher. The gains come after several of these stocks fell sharply last week.
Why Is JPMorgan Bullish on Semiconductor Stocks?
JPMorgan remains bullish on semiconductor stocks as earnings estimates remain strong despite the recent drop in share prices. The bank noted a growing gap between stock prices and earnings. This suggests the recent drop may not fully reflect the outlook for the sector.
Technical signals are also starting to look better. The SOX Index’s RSI is nearing oversold levels, which can signal that heavy selling has pushed stocks down too quickly. The recent drop has been steep, with the iShares Semiconductor ETF (SOXX) entering bear market territory on Friday after falling more than 20% from its June record high.
JPMorgan also remains upbeat on the memory chip market. It expects tight DRAM and NAND supply to continue through 2028 as AI and server demand stays strong.
At the same time, recent results from Taiwan Semiconductor Manufacturing (TSM) also support this view. TSMC reported record second-quarter profit and continued to see strong orders. The company’s net profit jumped 77% year-over-year to T$706.6 billion ($22 billion), easily beating Wall Street expectations. JPMorgan believes solid chip earnings could help support the sector after its recent fall.
Wall Street’s Take on Semiconductor Stocks
Using TipRanks’ Stock Comparison Tool, investors can compare major semiconductor stocks based on analyst ratings and price targets.
Among the stocks shown below, analysts see the highest upside in Nvidia at 52.82%. Meanwhile, AMD has the lowest upside at 9.19%. The screenshot below provides more details.
