Report published September 28, 2026
Tech De-Rating Became Advanced in a Number of Areas: J.P. Morgan Portfolio Strategy
J.P. Morgan · September 28, 2026
J.P. Morgan argues that the three-month stall and valuation de-rating in the Tech/AI complex have progressed far enough to warrant re-engagement, supported by cleaner positioning and resilient earnings. They recommend re-entering the long Semis vs short Software pair trade and remain bullish on broader equities into year-end as seasonality and rate volatility ease.
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Finvaulta summarizes J.P. Morgan's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Key Takeaways
- 1.The broad Tech and AI ecosystem de-rating has become advanced after stalling for three months, creating attractive re-engagement opportunities supported by cleaner positioning, durable capex upswings, and robust earnings.
- 2.Investors should re-enter the Semiconductors vs Software pair trade; while Software has de-rated sharply, Semis forward earnings continue to outpace Software significantly (30% vs near 0% since June).
- 3.The Magnificent 7 have de-rated to their cheapest relative forward P/E levels in 10 years; while negative free cash flow and rising leverage warrant multiple compression, the sell-off is viewed as largely overdone.
Table of Contents
- Tech de-rating became advanced in a number of areas
- Equity Strategy Key Calls and Drivers
- Top Picks
- Equity Flows Snapshot
- Technical Indicators
- Performance
- Earnings
- Valuations
- Economic, Interest Rate and Exchange Rate Outlook
- Sector, Regional and Asset Class Allocations
Report data
MSCI World Semis vs Software Price and EPS relative — as of September 24, 2026.
| Metric | Estimate | Context |
|---|---|---|
| Semis 12m Forward EPS Revisions since Peak | 30% | Semiconductors 12-month forward earnings increased 30% from peak to current, while software forward EPS grew only 3%. |
| Hyperscalers Aggregated Free Cash Flow | -96.4 USD bn | Hyperscaler aggregated FCF is projected to fall to -$96.4bn in 2027 from +$233.4bn in 2024 due to surging AI capex. |
| US 10-Year Treasury Yield | 5.14% | Crossed the 5% threshold for the first time in two decades. |
| S&P 500 Q3 2026 Estimated Earnings Growth | 14.9 % yoy | Market consensus Q3 earnings growth expectations for the S&P 500 led by IT at 30.8%. |
| MSCI Europe 12-Month Forward P/E | 14.2 x | MSCI Europe trades on 14.2x forward P/E compared to 19.2x for the S&P 500. |
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