By Naomi Buchanan
The chip sector has had a rough start to the second half of the year but it's time to buy the dip, according to JPMorgan analysts.
Investors may already be listening — the Nasdaq Composite rose 0.7% shortly after the open as the AI chip trade reignited on Wall Street early Monday.
The PHLX Semiconductor Sector Index, SOX, ended the shortened trading week ahead of the July Fourth holiday down 5.4%, its second consecutive weekly fall. But the SOX opened 2.5% higher, with some of last week's laggards, like Applied Materials, Marvell, and Broadcom, leading gains.
Memory stocks like Western Digital, Seagate, and Sandisk, also bounced back, fueling the Roundhill Memory ETF's more than 6.1% rise.
"We think the latest weakness in SOX and in Korea will be used as an opportunity to add, as semis upcycle is not peaking anytime soon, meaningful supply is not likely to arrive before 2028," JPMorgan strategists wrote in a note on their outlook for the second half of 2026.
Their bullishness doesn't extend to the AI trade at large, though. The strategists said they were "less excited" about the Magnificent Seven and cautious on what they call "AI cannibalization areas" like software, business services and media.
Write to Naomi Buchanan at naomi.buchanan@barrons.com
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