JPMorgan Warns Crowded Semiconductor Trade Faces Rising Risk of Sharp Selloffs - Yahoo Finance

JPMorgan's quantitative strategists have warned that the semiconductor sector is facing rising risks due to increasing market volatility and heavy investor positioning, particularly in one of the most... Read original →

JPMorgan’s warning reflects a convergence of stretched valuations and concentrated technical risk. With 3nm and EUV capacity overwhelmingly reliant on TSMC in Taiwan, China, VaR-driven selloffs could abruptly reduce wafer orders, destabilizing equipment makers like ASML and materials suppliers. Regulatory fragmentation—U.S. export controls plus the EU Chips Act—is inflating compliance and redundancy costs across global supply chains. NVIDIA and Broadcom may accelerate vertical integration to secure capacity, while Tesla could expand in-house chip development to reduce foundry dependence. Over the next 12–24 months, a valuation reset is inevitable: capital will flee firms with high market caps but low revenue conversion, favoring those delivering real AI compute. The $165B quarter-end rebalancing overhang may act as a catalyst for de-risking—not systemic collapse.