JPMorgan Suggests Gradual Investment in Semiconductors This Summer

JPMorgan's stock strategy report on July 20 noted that AI-related stocks have recently faced selling pressure, with the South Korean stock market dropping by 25% and the Philadelphia Semiconductor Index falling by 20%. Individual stocks like Samsung and Micron saw declines ranging from 20% to 50%. The report attributes this downturn primarily to technical factors and position liquidations, while the fundamentals have not deteriorated. The gap between the relative prices of semiconductors and earnings trends has widened, but the supply-demand balance for DRAM and NAND is expected to remain tight until 2028. DRAM spot prices remain high, and Micron has raised its earnings guidance, indicating that supply-demand tightness will persist at least until 2027. The Philadelphia Semiconductor Index's RSI is approaching the oversold territory, with accumulated momentum gains for the year largely retraced. JPMorgan assesses that once an oversold signal is confirmed, a rebound window will open, recommending investors to gradually invest in semiconductors this summer. The proportion of second-quarter earnings reports exceeding expectations reached 97%, with S&P 500 companies that reported better-than-expected earnings outperforming the market by an average of 1.7 percentage points on the reporting day. In terms of allocation, JPMorgan has increased its equity allocation from 60% to 65%, raised its Eurozone allocation from 8.7% to 11%, and is overweight in semiconductors, mining, capital goods, automotive, insurance, and banking, while underweight in software, business services, and media sectors. The report concludes that the "buy-the-dip" strategy since the end of March remains effective.

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