Key Takeaways:
JPMorgan declared Asian tech stocks a buying opportunity after a 25 percent to 30 percent drawdown, citing intact AI demand and rising hyperscaler spending.
The bank's Asian technology strategy team, in an Aug. 5 report, said the selloff across Asian tech and the Philadelphia Semiconductor Index has priced in earnings downgrades and hyperscaler capex cuts that are unlikely to materialize. "EPS expectations will keep rising over the coming quarters, revision breadth will widen, and hyperscaler 2027 capex guidance is trending higher," the report said.
Analysts Doug Anmuth and Samik Chatterjee forecast combined capex at Amazon, Microsoft, Google, Meta, Oracle, Coreweave and SpaceX to grow about 103 percent to roughly $901 billion in 2026, then rise a further 65 percent to about $1.49 trillion in 2027. Contract backlogs support the spending: Google Cloud holds more than $514 billion in backlog, Amazon Web Services $496 billion and Microsoft $678 billion in remaining performance obligations. Combined public cloud revenue added about $15 billion in the second quarter, nearly double the prior quarter.
JPMorgan said Asian tech excluding memory trades about one standard deviation above its 10-year average price-to-earnings ratio, not excessively expensive after the correction. It named semiconductor equipment the most attractive subsector over the next 12 months, expecting TSMC and major memory makers to raise capex guidance, with equipment and cleanroom space becoming the next bottleneck in 2027 to 2028. IC substrates carry the strongest fundamentals in components, supported by larger AI accelerator packages and EMIB-T packaging adoption from late 2027.
The bank is more cautious on memory. Nvidia and AMD plan lower-HBM-density accelerators — Vera Rubin and MI455 with 8-HBM4 stacks — and are trimming SoCAMM memory on the 2027 Vera CPU to manage DRAM supply and cost, a pattern similar to past down-spec cycles. Memory stocks, down more than 40 percent, may rebound over six months but are unlikely to reclaim May 2026 highs soon.
The call comes as Asian chipmakers swing violently. Samsung Electronics and SK Hynix plunged nearly 9 percent each Monday after an 18 percent surge Friday, while TSMC fell more than 2 percent. The Kospi slumped 5.1 percent.
The recommendation gives investors a contrarian entry into a sector whose drawdown JPMorgan views as a valuation reset rather than a broken thesis. The next test is whether hyperscaler capex guidance for 2027, due through the coming earnings cycle, confirms the bank's $1.49 trillion forecast.
This article is for informational purposes only and does not constitute investment advice.
