JPMorgan Warns of Market Divergence Similar to 1999 Tech Bubble as Semiconductor Index Surges 87%

According to JPMorgan Chase chief technology strategist Jason Hunter on July 2, U.S. equity markets are showing signs of divergence similar to the months before the 1999-2000 tech bubble burst. AI hardware supply chain stocks are surging while hyperscale cloud providers that are heavily investing in AI infrastructure are facing selling pressure.

The Semiconductor Index has jumped 87% year-to-date, with memory stocks particularly strong; the Roundhill Memory ETF has gained 141% since its April launch. Meanwhile, the Magnificent 7 technology ETF has fallen approximately 7% from its January peak, with Meta and Microsoft—the highest AI capital spenders—showing significant declines. JPMorgan noted this mirrors 1999, when telecom equipment makers soared while telecom and internet companies crashed due to excessive capital expenditures. Meta, Microsoft, Amazon, and Alphabet are collectively expected to spend $725 billion on AI this year.