JPMorgan: Global AI Stock Selloff May Be Nearing Its End

Cailian Press Financial News Agency

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Cailian Press, October 23 (Editor Liu Rui) — In recent days, as market concerns about the AI boom have intensified, global tech stocks have come under considerable selling pressure. In its latest research report, JPMorgan told clients that the recent sell-off in AI-related stocks may be nearing its end.

JPMorgan pointed out that since mid-September, the structure of global equity holdings has undergone a significant reset. JPMorgan strategist Nikolaos Panigirtzoglou said that the bank's overall equity holdings indicator shows that current equity holdings levels have fallen sharply from their previous highs; although some unfavorable factors remain in the short term, the position adjustment situation may begin to limit further declines in the market.

Recently, the market has continued to worry about the funding stability of neoclouds, with the market view holding that once such entities encounter financing obstacles, it could drag down the entire AI capital expansion cycle.

"Neoclouds are not a key, large-scale component of the entire AI ecosystem," Panigirtzoglou wrote in the report. Globally listed tech companies are expected to generate a combined cash flow of about $2.2 trillion this year, with capital expenditure of about $1.8 trillion; among that, neoclouds account for only about $30 billion in cash flow and $80 billion in capital expenditure, respectively.

The strategist said:

From the perspective of sector funding fundamentals, the global tech sector overall has a financing surplus of about $400 billion this year, and its cash flow is sufficient to cover capital expenditure.

JPMorgan also emphasized that most tech companies are currently issuing debt mainly to maintain stock buyback plans while increasing capital investment; and if financing panic spreads further, companies can completely choose to postpone buybacks or adopt more circular financing methods.

Panigirtzoglou added: "That is to say, the sector as a whole is in a financing surplus state, and the tech industry has an internal funding buffer."

The bank also mentioned that the semiconductor sector currently consumes about one-fifth of global equity market risk capital and is prone to passive selling caused by volatility. However, JPMorgan judges that trend-following investors such as hedge funds and commodity trading advisors (CTAs) have basically finished reducing their previously elevated long positions in semiconductors, which means the sell-off is nearing its end.

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Related sectors: Semiconductors +3.78% Engineering Construction +0.88% Artificial Intelligence +3.27%

Cailian Press Statement: The content of this article is for reference only and does not constitute investment advice. Investors who act on it do so at their own risk.

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