JP Morgan Advised Investors to Buy Technology Stocks
The bank suggests semiconductor gains and lower valuations signal a recovery in the technology sector.
Updated on Sept. 28, 2026 in Semiconductors
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JP Morgan strategist Mislav Matejka has advised investors to resume buying technology stocks, citing that the three-month decline in share prices has concluded. The bank suggests the sector is now better positioned following a market de-rating process.
Why it matters
The recommendation highlights a strategic shift toward hardware infrastructure as artificial intelligence earnings begin to materialize. The bank argues that valuation adjustments related to corporate debt and cash flow are largely complete, stabilizing the sector for future growth.
Semiconductor forward earnings have risen 30% since June, while the Magnificent Seven stocks are currently trading at their lowest valuations in 10 years.
The players
JP Morgan
A global financial institution providing capital market research and investment strategy for technology infrastructure.
Mislav Matejka
A strategist at JP Morgan who monitors sector-wide valuation metrics and earnings growth projections.
The details
JP Morgan identifies a de-rating process—a mechanism where stock prices fall relative to their earnings potential—that has brought valuations down across most technology areas. The firm compares sector strength by tracking forward earnings estimates, noting that semiconductor firms show stronger fiscal momentum compared to software companies. This structural shift is underpinned by persistent artificial intelligence infrastructure spending, which acts as a fundamental floor for hardware-focused companies.
Timeline
June 2026: The technology share decline began.
Two weeks ago: Software shares saw a short-term rally against chip stocks.
Last week: The stagnation in the technology and artificial intelligence trade concluded.
Past ten years: This period marks the historical valuation range for Magnificent Seven stocks.
The Tech Race
This guidance marks a departure from the recent cooling-off period of the Magnificent Seven stocks. It shifts the competitive focus toward semiconductor hardware providers rather than the previous software-dominated market cycle.
Investors may see a pivot in portfolio strategy as institutions favor hardware-heavy chip manufacturers over software firms. This transition reflects a stabilizing market where artificial intelligence infrastructure is prioritized over speculative software growth.
The takeaway
The firm expects technology stocks to maintain stability without returning to the extreme outperformance seen in previous years. Watch for upcoming forward earnings updates to confirm if the 30% growth in semiconductor earnings sustains its momentum.
Further reading
For broader trends in the industry, see the Semiconductors section.
Source note: This article includes information reported by Proactiveinvestors UK.
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