JPMorgan warns: The sustainability of excess returns in chip stocks is limited by the capital expenditure willingness of cloud service providers.

In the bank's more optimistic scenario, hyperscale cloud service providers, AI model developers, and enterprise clients enhance their ability to monetize AI investments, thereby driving stronger revenue and profit growth. A less favorable outcome would be that semiconductor companies continue to outperform, but at the expense of their largest customers (including hyperscale cloud service providers and AI model developers). Although the bank acknowledges these risks, it states that its core view remains aligned with the more optimistic scenario.