Why JPMorgan believes the recent AI selloff is setting up a semiconductor rebound

JPMorgan argues the recent AI-linked semiconductor selloff looks more like a tactical reset than the start of a deeper downturn. The bank notes sharp declines across AI and memory-chip names, with Korea’s KOSPI down 25% from its recent high and the Philadelphia Semiconductor Index down 20%. Despite this, JPMorgan says earnings fundamentals remain resilient, with forward estimates still rising and DRAM/NAND supply-demand tightness expected to persist through 2028. The firm sees the pullback as creating an attractive entry point, especially as technical positioning has become less stretched and the SOX RSI is nearing oversold territory. JPMorgan remains Overweight on semiconductors and expects Q2 results, including TSMC’s order momentum and capacity commentary, to help reinforce a rebound narrative. The setup is constructive for chip stocks broadly, including Micron and Taiwan Semiconductor, with the implication that investors may use summer weakness to add exposure.