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      J.P. Morgan Highlights Challenges for AI Stocks Amid October Sell-Off

      J.P. Morgan strategist Nikolaos Panigirtzoglou has indicated that the recent sell-off of AI stocks in October may not replicate the swift recovery observed in July. The current market shows a diminished willingness to buy on dips, with insufficient short positions to trigger potential short-covering buying. Additionally, corporate buyback funds are decreasing, and leveraged exposure in exchange-traded funds (ETFs) is being rebuilt, which could heighten market volatility.

      The sell-off has affected various sectors, notably spreading from South Korean memory chip manufacturers to the U.S. semiconductor industry. Companies such as SK Hynix and Samsung Electronics have experienced stock price declines of nearly one-third over the past month, while the Philadelphia Semiconductor Index has dropped by 10% in the last five trading days. The completion of a $40 billion stock buyback plan by these companies in mid-October may have further reduced market support from corporate buybacks.

      In related news, BlackRock CEO Larry Fink has cautioned that a halt in data center construction in the U.S. could lead to a recession. He emphasized that a significant portion of U.S. economic growth is tied to capital expenditures in AI infrastructure. As concerns grow regarding the profitability of AI investments, price adjustments within the AI supply chain may also affect data center construction, energy infrastructure, and related employment sectors.

      © 2026 KLEA News. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

      Source: KLEA News

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