JPMorgan Warns of AI Stock Divergence as Mag 7 ETF Stalls at 1.5% While Semiconductor Index Surges 70%

According to MarketWatch, JPMorgan strategist Jason Hunter warned that the artificial intelligence sector is experiencing market divergence similar to the dot-com bubble period. The Magnificent Seven ETF has gained only 1.5% year-to-date, while the Philadelphia Semiconductor Index has surged over 70%, reflecting a shift where AI-investing companies face selling pressure while chip suppliers thrive.

Hunter cautioned that if mega-cap cloud service providers fail to break key technical resistance levels in the coming weeks, the current sector rotation could escalate into a more severe selloff. He noted the similarity to the late 1990s when infrastructure stocks continued rising while communication service stocks stagnated. Hunter identified critical technical levels: the semiconductor index must hold above 12,769 to 13,333 points; failure would target 9,975 to 10,554 points, representing a 28-32% further decline from June highs.