tech
Asia tech sell-off has not derailed AI investment cycle, J.P. Morgan says
The recent 25%-30% correction in Asian tech stocks and the Philadelphia Semiconductor Index marks the third major drawdown since the upcycle began in late-2022.
TL;DR
- Recent 25%-30% corrections in Asian tech stocks and the Philadelphia Semiconductor Index are not indicative of a fundamental AI slowdown.
- Demand for AI inference remains strong, with frontier AI models continuously improving.
- Hyperscalers are expected to maintain or increase AI compute investments, potentially using equity and debt markets for financing.
- Semiconductor equipment manufacturers, 2.5D and 3D packaging, and IC substrates are identified as strong sub-sectors.
- While memory fundamentals are sound, recent product changes may weaken the narrative of price-inelastic AI-driven memory demand.
- Power availability is anticipated to become a primary constraint for AI compute infrastructure within 18-24 months.