JP Morgan: The upward cycle of Asian technology stocks is not over yet, pay attention to TSMC, Hon Hai, etc

JP Morgan released a report stating that the recent adjustment in Asian technology stocks over the past two weeks has raised concerns in the market about whether the upward cycle driven by generative AI has come to an end. However, the bank's answer is that it is not over yet. The current adjustment is similar to the mid-term adjustments in August to September 2023 and April 2024. It is believed that the spending on AI hardware will continue to increase in the next one to two years. While the non-AI technology industry is recovering slowly, inventories have gradually been cleared, and market demand is returning. JP Morgan believes that although the overall valuation of Asian technology stocks is high, it is not excessive and does not reflect the peak of the cycle. Profit forecasts for companies will also continue to be revised upwards. After the recent significant adjustment, investors can refocus on stocks with high earnings growth, including TSMC, Hon Hai, SK Hynix, and Quanta. In addition, the widespread application of AI to edge devices is beneficial for companies like MediaTek, Largan Precision, and Luxshare Precision. Stocks that have significantly underperformed but have a strong foundation may also return to investors' attention, such as ASMPT and SMIC