Markets are flashing another parallel to the dot-com bubble, JPMorgan says.
The bank’s Jason Hunter pointed to one trend in particular in markets that looks similar to what happened to stocks in the months leading up to the dot-com crash. The signal has to do with the recent divergence in the AI trade, with hardware stocks separating from some of the biggest AI spenders in the market, Hunter wrote in a client note on Wednesday.
Chip stocks have been on a tear for most of 2026. The Philadelphia Semiconductor Index — which has soared 87% this year — just logged its best-ever quarter, a testament to how the focus has intensified on the AI buildout.
Other companies tied to AI hardware have also found success in markets this year. Memory stocks have ripped higher for much of 2026, with the Roundhill Memory ETF up 141% since its inception in April.
That performance differs from companies that have been among the most voracious spenders, many of which have been punished as investors air concerns about return on investment and whether AI will pay off from a monetization perspective.
The Magnificent Seven stocks — which rode the AI frenzy for much of 2025 — have struggled, with the Roundhill Magnificent Seven ETF down 7% from its peak earlier this year.
Meta and Microsoft, two of the biggest spenders on AI capex, have been hit particularly hard since January, losing 5% and 18% year to date, respectively. Microsoft ended June with its worst monthly loss since 2000.
That split in markets mirrors a divide that took place in 1999, when companies supplying communications equipment began to see a “parabolic rise,” while companies making heavy capital investments in the space tumbled from their peaks.
The dot-com bubble eventually burst in early 2000, less than a year after that divide was first noticed, Hunter said.
“The growing divergence that exists now and the outright negative hyperscalers price performance are reminiscent of the 1999-2000 dynamic,” Hunter wrote. “The setup keeps our focus on the individual hyperscalers’ charts, waiting to see if those stocks find some footing this summer and potentially reduce the risk that the market could face a sentiment and position driven setback into the fall,” he added.
Concerns have been growing about the enormous amount of investment being poured into AI. AI capex from Meta, Microsoft, Amazon, and Alphabet, four of the biggest spenders on artificial intelligence, is on track to hit $725 billion this year, according to company statements.
By the end of the decade, AI capex from those companies alone could exceed the GDP of major economies like Japan, according to one projection from Goldman Sachs.
