Semiconductor leaders may find their position harder to maintain.

JPMorgan Chase suggests the strong outperformance of artificial intelligence semiconductor firms relative to hyperscale cloud providers may not continue indefinitely, with the current valuation gap between the two unlikely to persist at its current level over the long term.

Analyst Nikolaos Panigirtzoglou outlined two potential paths that could narrow this performance divergence in a report to clients.

Two Scenarios That Could Reshape the AI Investment Landscape

In the bank's more optimistic scenario, hyperscale cloud providers, AI model developers, and enterprise customers improve their ability to monetize AI investments, driving stronger revenue and profit growth.

JPMorgan Chase states this would allow these companies to "catch up and capture a larger share of the overall AI value-added pie."

The less favorable outcome would be for semiconductor firms to continue outperforming, but at the expense of their largest clients, including hyperscale cloud providers and AI model developers.

Under that scenario, stronger returns for the chip sector could "begin to dampen capital expenditure willingness" and "ultimately become a headwind to demand for semiconductor companies' products."

JPMorgan Maintains a Constructive Outlook

While acknowledging these risks, the bank indicated its core view remains aligned with the more optimistic scenario.

However, JPMorgan Chase also noted that many equity analysts currently anticipate a significant deceleration in capital expenditure growth from hyperscale cloud providers starting next year.

The bank said this consensus "on the surface would tilt towards the negative scenario."

Chip Stocks Remain Vulnerable After Extended Outperformance

JPMorgan Chase highlighted that semiconductor stocks, particularly AI processor and memory chip makers, have outperformed hyperscale cloud providers since last September.

The bank believes this sustained leadership could leave the sector increasingly vulnerable if investor expectations begin to cool.

Money Supply and Cryptocurrency Also in Focus

Beyond the AI sector, JPMorgan Chase forecasts the incremental U.S. money supply will increase from $1.6 trillion in 2025 to $1.8 trillion in 2026.

The bank also commented on digital assets, warning that MicroStrategy "introduces an avoidable two-way risk to the crypto market, amplifying uncertainty and volatility."