JPMorgan: Coming Weeks May Decide Whether AI Stock Split Is Rotation or Trouble

JPMorgan says the AI rally is starting to fracture, and the next few weeks could determine whether the market is seeing a normal rotation or the early signs of a more serious unwind. In a recent note, JPMorgan strategist Jason Hunter pointed to a widening gap between AI chip and infrastructure names and the large "hyperscalers" spending heavily to build out AI capacity. The Philadelphia Semiconductor Index is up 87% year to date through early July 2026. Over the same stretch, Meta shares are down 5% and Microsoft is down 18%, with Microsoft logging its worst monthly decline since 2000 in June. Hunter also drew a parallel to the late 1990s, when hardware and infrastructure stocks surged while the companies footing the bill for that infrastructure began to falter. Spending expectations remain enormous. Four hyperscalers—Meta, Microsoft, Amazon, and Alphabet—are projected to spend a combined $725 billion on AI-related capital expenditures in 2026. In a separate estimate, JPMorgan put 2026 capex for five major hyperscalers at about $697 billion. For the summer, Hunter urged investors to focus on the stock charts of individual hyperscalers. The message is simple: if Meta, Microsoft, Amazon, and Alphabet can stabilize and show signs of recovery before autumn, the broader market is more likely to stay intact. Morgan Stanley struck a somewhat more constructive tone in early July 2026, suggesting a shift may already be underway from semiconductor momentum toward hyperscalers. Crypto traders may want to watch this dynamic closely even though JPMorgan's note did not address digital assets. A sharp correction in AI equities could spill over into broader risk appetite, which often matters for crypto. In particular, hyperscaler earnings guidance over the next few weeks could prove pivotal. If the market is rotating toward hyperscalers rather than breaking down, it would signal that the AI theme is still intact—with investors simply changing where they want exposure.