AI chip stocks surge 87% as hyperscalers lag, JPMorgan warns

A widening gap between AI chip stocks and hyperscaler giants is drawing comparisons to the late-1990s dot-com era, JPMorgan said.

The Philadelphia Semiconductor Index surged 87% year-to-date through early July, while Microsoft dropped 18% and Meta fell 5%, JPMorgan data show.

"The divergence between AI infrastructure plays and the hyperscalers funding that buildout is a throwback to the late 1990s setup," said Jason Hunter, strategist at JPMorgan.

The four largest hyperscalers — Meta, Microsoft, Amazon and Alphabet — are projected to spend a combined $725 billion on AI-related capital expenditures in 2026, according to JPMorgan. Microsoft posted its worst monthly loss since the year 2000 in June, the note highlighted. JPMorgan separately estimated that five major hyperscalers would collectively spend around $697 billion.

If Meta, Microsoft, Amazon and Alphabet can stabilize before autumn, the broader market probably holds together, Hunter wrote. Morgan Stanley suggested in early July that a rotation from semiconductor momentum toward hyperscalers may already be underway.

What the Next Few Weeks Will Determine

Hunter's note urged market participants to pay close attention to individual hyperscaler performance charts over the summer months. The thesis is straightforward: if the four giants show signs of recovery before autumn, the broader market probably holds together. If they continue to weaken, the divergence could signal something more troubling.

The pattern echoes the late 1990s, when hardware and infrastructure companies ran hot while the companies spending on that infrastructure started wobbling. Today's version features hyperscalers pouring hundreds of billions into AI buildout while their stock prices lag the very suppliers benefiting from that spending. The Philadelphia Semiconductor Index's 87% surge contrasts sharply with Microsoft's 18% decline — a gap that JPMorgan said warrants close monitoring.

Morgan Stanley offered a slightly more optimistic read in early July, suggesting that a sector rotation from semiconductor momentum toward hyperscalers might already be underway. If that rotation gains traction, it could narrow the divergence and ease concerns about an AI bubble. But if hyperscaler stocks continue to slide while chip stocks hold their gains, the divergence becomes harder to dismiss as a healthy market adjustment.

For crypto investors, the downstream effects of a potential AI stock correction matter for digital asset markets. A broad selloff in tech could spill into bitcoin and other risk assets, which have increasingly correlated with equity market moves during periods of stress. Morgan Stanley's suggestion that rotation toward hyperscalers is beginning could be the more important signal — rotation implies the market is still functioning normally, just shifting preferences within the AI theme.

The warning from JPMorgan comes as the AI trade has been the primary driver of equity market gains in 2026. If the divergence between chip stocks and hyperscalers widens further, it could trigger de-risking across the technology sector and potentially spill into the broader Nasdaq and S&P 500. The comparison to the late 1990s dot-com era may fuel investor anxiety about an AI bubble, even as proponents argue that the current AI buildout is backed by real revenue growth rather than speculative hype.

The next few weeks of hyperscaler earnings guidance will be worth monitoring closely, as they will determine whether the divergence is a healthy rotation or the early stages of a broader correction.

This article is for informational purposes only and does not constitute investment advice.