JPMorgan: Tech Valuations Fully Contracted, Semiconductors Outperform Software

According to Trend Research, a JPMorgan research report dated September 28, 2026 notes that the technology and AI ecosystem stagnated for three months from June through last week, though valuation downgrades have already become highly pronounced across most sectors. Forward earnings for semiconductors continue to climb by approximately 30%, while software has seen almost no earnings upgrades. Valuations for the Tech Seven Giants have fallen to ten-year lows, trading at nearly one standard deviation below the broader market. Capital expenditures by hyperscalers are projected to grow at a 28% compound annual growth rate through 2030. JPMorgan argues that with cleaner positioning, persistent earnings momentum, and an intact capital expenditure upcycle, it advises re-entering the technology sector and reopening a semiconductor-over-software pair trade. Agentic AI is pushing the CPU-to-GPU ratio from 1:4 to 1:8 toward 1:1, providing tailwinds for CPU-related names.