JPMorgan Chase & Co. (NYSE:JPM) is telling investors to favor companies collecting Big Tech’s artificial intelligence spending over those writing the checks.
The bank ranks semiconductors ahead of hyperscalers and businesses vulnerable to AI disruption.
That puts chipmakers including Nvidia Corp. (NASDAQ:NVDA), Broadcom Inc. (NASDAQ:AVGO) and Advanced Micro Devices Inc. (NASDAQ:AMD) on the favored side of the trade.
The call cuts against Morgan Stanley (NYSE:MS) CIO Mike Wilson’s forecast that hyperscalers will outperform semiconductor stocks over the coming months.
JPMorgan Picks the Suppliers
The JPMorgan team, led by Mislav Matejka, said Monday that technology stocks may take a back seat during the remainder of 2026.
Investors remain concerned that hyperscaler spending may not generate adequate returns and that AI could disrupt existing software businesses.
The bank nevertheless prefers semiconductors, arguing that rising technology spending should support chip demand while leaving chipmakers less exposed to AI cannibalizing their existing products.
As Benzinga reported Monday, Bank of America Corp. (NYSE:BAC) expects hyperscaler capital expenditures to top $1.2 trillion over the next 12 months.
BofA’s preferred suppliers include Nvidia and AMD in accelerated computing, Broadcom and Marvell Technology Inc. (NASDAQ:MRVL) in custom silicon and networking, and Micron Technology Inc. (NASDAQ:MU) in memory.
Its nine Buy-rated chip stocks offer at least 30% implied upside to its price objectives.
Morgan Stanley Backs the Spenders
Wilson said that investors had piled back into semiconductors even as their earnings revisions approached a peak.
Chipmakers ultimately depend on hyperscaler spending.
Wilson argues that greater discipline from Microsoft Corp. (NASDAQ:MSFT), Amazon.com Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOGL) and Meta Platforms Inc. (NASDAQ:META) could slow suppliers’ growth while easing pressure on the buyers’ cash flow.
His call does not require the AI buildout to end.
Morgan Stanley is betting expectations have become harder for chipmakers to beat, while more disciplined spending could make their customers more attractive.
Wilson described it as the fourth rotation between the two groups since ChatGPT launched and said hyperscalers were "likely to outperform the semis."
Prediction Traders Still Favor Nvidia
Polymarket traders still expect the leading supplier to retain the market-cap crown.
A contract on which company will finish 2026 with the world’s largest market capitalization has attracted more than $5.4 million in volume.
Nvidia holds a 56% chance, followed by Apple Inc. (NASDAQ:AAPL) at 19% and Alphabet at 17%, while Microsoft sits near 1%.
While the contract measures market-cap leadership rather than relative returns, traders holding Nvidia at 56% through year-end are not yet betting on the rotation Wilson sees.
Image: Shutterstock
Login to comment