JPMorgan: Tech Valuations Fully Contracted, Semiconductors Outperform Software

TechFlow reports, according to Trend Research, JPMorgan's September 28, 2026 research note indicates that the tech and AI ecosystem stalled for three months from June to last week, but downward valuation revisions have become highly pronounced across most areas. Semiconductor forward earnings continue to rise by approximately 30%, while the software sector has seen almost no earnings upgrades. Valuations for the Mag 7 have fallen to their lowest point in a decade, trading at nearly one standard deviation discount to the broader market. Hyperscaler capital expenditures are projected to achieve a 28% compound annual growth rate through 2030.

JPMorgan believes that with cleaner positioning, sustained earnings momentum, and an intact capex upcycle, the bank recommends re-engaging with the technology sector and re-entering the long semiconductors vs. short software pair trade. Agentic AI is pushing the CPU-to-GPU ratio from 1:4 to 1:8 toward 1:1, benefiting CPU-related equities.