Gap between chipmakers and hyperscalers may narrow
JPMorgan believes the prolonged outperformance of artificial intelligence semiconductor companies over hyperscale cloud providers is unlikely to persist indefinitely, arguing that the current performance gap could become increasingly difficult to justify.
In a research note, analyst Nikolaos Panigirtzoglou described two potential outcomes that could bring the two sectors closer together.
Better AI monetization could benefit hyperscalers
Under JPMorgan’s preferred scenario, hyperscalers, AI model developers and corporate users generate stronger revenues and profits from artificial intelligence investments.
The bank said this would enable them to “catch up, capturing a bigger share of the overall AI value-added pie.”
Alternatively, if semiconductor companies continue to capture a disproportionate share of AI spending, the resulting pressure on customers’ profitability could “start to depress capex intentions” and “eventually act as a headwind to demand for the semiconductor companies’ products.”
Capital spending outlook remains a key risk
While JPMorgan continues to favour the more constructive scenario, it pointed out that many analysts expect hyperscaler capital expenditure growth to slow sharply from next year.
The bank noted that this consensus, “taken at face value would tilt towards the negative scenario.”
Extended rally leaves semiconductor sector exposed
AI chipmakers and memory producers have consistently outperformed hyperscalers since September, according to JPMorgan.
Although the trend has rewarded investors, the bank warned that the sector could become more vulnerable if expectations for future AI investment begin to cool.
Broader market observations
JPMorgan also forecasts U.S. money creation to rise from $1.6 trillion in 2025 to $1.8 trillion in 2026.
Separately, the bank cautioned that MicroStrategy has “introduced avoidable two-way risk into crypto markets inducing more uncertainty and volatility.”
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