{"id":55342,"title":"What Brokers Say on AI Sell Off Nearing Maturity with Earnings to Provide Market Floor","publisher":"Stockmark.IT","author":"Stockmark.IT Website","published":"2026-07-21T13:33:49+00:00","modified":"2026-07-21T13:33:49+00:00","canonical_url":"https://stockmark.it/what-brokers-say-on-ai-sell-off-nearing-maturity-with-earnings-to-provide-market-floor/","markdown_url":"https://stockmark.it/what-brokers-say-on-ai-sell-off-nearing-maturity-with-earnings-to-provide-market-floor.md","json_url":"https://stockmark.it/what-brokers-say-on-ai-sell-off-nearing-maturity-with-earnings-to-provide-market-floor.json","category":"AI","categories":["AI","Artificial intelligence"],"featured_image":"https://i0.wp.com/stockmark.it/wp-content/uploads/2026/07/what-brokers-say-on-ai-sell-off-nearing-maturity-with.webp?fit=1200%2C669&quality=80&ssl=1","format":"news","language":"en-GB","content":"The recent sell-off in artificial intelligence and momentum stocks has entered a mature phase and is unlikely to precipitate sustained market weakness, according to analysis from JP Morgan. The US banking giant’s equity strategists, led by Mislav Matejka, have assessed the recent turbulence affecting AI-linked equities following several challenging weeks for the sector.\n\nThe South Korean market has declined 25% from its previous monthly high, whilst the SOX semiconductor index has retreated 20%. Individual equities, including Samsung and Micron, have experienced declines ranging between 20% and 50%. The Magnificent Seven technology stocks have seen their performance relative to broader markets stabilise recently, although they continue to lag on a year-to-date basis. Meanwhile, baskets of stocks identified as vulnerable to AI disruption continue to underperform by more than 20% for the year.\n\nDespite drawdowns exceeding 20% amongst numerous heavyweight stocks, JP Morgan noted encouragingly that the MSCI World index remains within 1% to 2% of its all-time highs. The bank contends that AI-focused groups should not continue declining in absolute terms for an extended period, citing the likelihood of sustained robust earnings growth and increasing valuation support.\n\nSemiconductor stocks in particular should attract buying interest in the near term, JP Morgan argued, as significant supply additions are not anticipated before 2028. This timeline renders premature any attempts to price in a cyclical turning point. The bank maintains its advocacy for rotation and broadening market leadership during the second half of the year, whilst retaining medium-term concerns regarding the monetisation of hyperscalers’ substantial capital expenditure increases.\n\nJP Morgan maintains a fundamentally bearish stance on software, business services and media sectors, identifying these groups as most exposed to AI cannibalisation. The strategists highlighted that inflation rates have begun to peak in recent data releases, which could deliver lower bond yields, less hawkish central bank policies and a weaker US dollar. These conditions would collectively support broader market leadership.\n\nInflation remains sensitive to Brent crude oil prices and geopolitical developments in Iran. However, the bank perceives no de-anchoring of expectations and has maintained since March its recommendation to purchase geopolitically driven market dips.\n\nEarly second-quarter results have demonstrated strength, with aggregate share price reactions to earnings beats proving positive in both the United States and Europe, notwithstanding some notable weakness in technology stocks. Eurozone earnings revisions have accelerated for 15 consecutive weeks, fully closing the gap with the United States for the first time since January 2025."}