Semiconductor Suppliers or Hyperscalers: Who Will Win in AI Era?

JPMorgan Chase & Co. is advising investors to favor companies that supply semiconductors, which are crucial for artificial intelligence development, over those creating AI technology themselves.

The bank's Mislav Matejka-led team believes that rising technology spending will drive demand for chips, making semiconductor stocks less exposed to potential disruptions from AI cannibalizing their existing products.

JPMorgan has nine Buy-rated chip stocks with at least 30% implied upside to its price objectives.

In contrast, Morgan Stanley's Mike Wilson predicts that hyperscalers will outperform semiconductor stocks over the coming months. He notes that chipmakers ultimately depend on hyperscaler spending and are vulnerable to earnings revisions approaching a peak.