JPMorgan strategist Mislav Matejka said the recent weakness in semiconductor stocks should be used as a buying opportunity, while flagging that broader market participation is set to widen in the second half of 2026 as stagflation fears unwind.

“The risks of renewed flareups remain, but we believe one should keep using any dips on the back of adverse geopolitical headlines in order to add,” wrote Matejka.

Matejka told clients in a note on Monday that the firm’s pecking order for technology positioning is “semis over hyperscalers over AI at risk plays,” adding that “the latest weakness in SOX and in Korea will be used as an opportunity to add, as semis upcycle is not peaking anytime soon, meaningful supply is not likely to arrive before 2028.”

On the Magnificent Seven, Matejka was more cautious, saying earnings and valuation tailwinds remain but that the group is “likely to see derating continuing on monetization fears.” 

JPMorgan said it stays “fundamentally bearish on AI cannibalisation trades,” including software, business services and media, though it acknowledged tactical bounces are likely when the group becomes oversold.

The strategist believes the unwinding of the Iran conflict’s market impact is a key catalyst for the second half, arguing that oil prices, inflation expectations, bond yields and central bank rate projections “could all reverse their upmove that was seen during Q2.”

At the broader market level, JPMorgan said it looks for fresh highs in global equities in the second half, supported by a strong earnings outlook, easing inflation pressures and lighter investor positioning. 

Matejka added that AI is “unlikely to be the only story in town in 2H,” with small caps, cyclicals and international markets all expected to benefit from a broadening in market participation.