J.P. Morgan anticipates the semiconductor industry will post second-quarter results that are in line with or slightly above expectations, fueled by robust demand for AI technologies, early signs of a cyclical rebound, and accelerated inventory purchases linked to trade concerns.
Despite the upbeat near-term outlook, the bank is sounding a note of caution for the second half of 2025. Analysts warn that escalating trade tensions and the potential introduction of new tariffs could dampen momentum.
The firm pointed out that between 80% and 85% of the semiconductor and semiconductor equipment companies it tracks received upward earnings revisions in Q1 2025—significantly higher than the 30–50% seen across 2023 and 2024. That trend is likely to carry through into the current earnings season, with many companies expected to meet or slightly beat consensus estimates.
“AI/accelerated compute demand remains strong,” analysts noted, adding that capital expenditures in cloud data centers are projected to jump 40% year-over-year in 2025.
Names like Broadcom (NASDAQ:AVGO), Marvell Technology (NASDAQ:MRVL), and Nvidia (NASDAQ:NVDA) are seen as top beneficiaries of the ongoing AI infrastructure build-out, according to the bank.
However, J.P. Morgan cautioned that the industry could face turbulence in the latter half of the year. Tariff uncertainty and the possibility of demand front-loading could act as headwinds, particularly for consumer-oriented sectors like PCs and smartphones. Industrial and automotive chip markets may also struggle to gain traction due to sluggish cyclical trends.
The bank continues to favor select opportunities within the space, particularly those exposed to AI development, chip design tools, and semiconductor manufacturing equipment. Standout picks include KLA Corp (NASDAQ:KLAC) and Synopsys Inc (NASDAQ:SNPS).
While wafer fab equipment spending is expected to remain flat for the year, J.P. Morgan sees long-term upside driven by increasing technological complexity in chip manufacturing.
Though investor sentiment currently appears unshaken by trade-related risks, analysts warned this could change quickly. “A potential pullback” may occur as ongoing trade dynamics begin to weigh on what have otherwise been favorable cyclical developments.
Marvell Technology stock price
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