U.S. Tech Stocks Hit by Brutal Sell-Off! JPMorgan Yells "Buy the Dip" and Spotlights These AI "Bargains"

 

As AI bubble fears intensify and the outlook for a December Fed rate cut grows uncertain, U.S. tech stocks have been hit by heavy selling in recent days, ending their relentless rally so far this year. The tech-heavy Nasdaq has fallen more than 6% so far this month.

 

JPMorgan believes that for investors looking to bottom-fish tech, the time to act is now. The recent sell-off has created attractive entry points to buy high-quality companies at a discount.

 

Late last week, JPMorgan analysts told clients in a note that it may be time to buy the dip in hardware and networking stocks, which have taken a beating in recent weeks.

 

The analysts highlighted 15 highly AI-exposed names that they believe have seen risk priced in excessively while maintaining strong fundamentals and offering substantial upside potential – making them the most compelling bargains right now.

 

Most of the stocks on JPMorgan’s list are down roughly 10% to 30% from their highs of the past four weeks, with the hardest-hit name off nearly 40% and the mildest decline around 5%.

 

JPMorgan argues that market concerns may have gone too far, leaving many companies with solid financials and sound operations deeply undervalued.

 

PC maker Dell is one of JPMorgan’s top picks; its shares have already dropped a quarter from their late-October peak.

 

In sharp contrast, Morgan Stanley early last week downgraded several hardware names. Among them, Dell was cut two notches straight from Overweight to Underweight, with the price target slashed from $144 to $110.

 

The downgrade rationale: surging memory prices, Dell’s heavy reliance on memory-intensive PCs and servers (making it highly vulnerable to rising costs), plus a shift toward structurally lower-margin AI servers – a double whammy pressuring near-term profitability.

 

JPMorgan counters in its report: “While margin pressure is a risk, investors are underestimating Dell’s proven track record of successfully navigating component price increases.”

 

JPMorgan also strongly recommends server maker Arista Networks; laser systems leader Coherent; EMS providers Flex and Jabil; and connector giant Amphenol, among others.

 

Like Dell, these companies derive much of their AI-related business from Big Tech giants that are expected to keep ramping infrastructure spending in the near term, and they enjoy far more stable financing than newer industry players.

 

Nvidia partner and server manufacturer Super Micro Computer also made JPMorgan’s list, along with Apple supplier and smartphone glass maker Corning, and optical component players Fabrinet and Lumentum.

 

Rounding out the recommendations are data-storage provider Pure Storage, high-speed networking firm Ciena, data-center supply-chain specialist Celestica, test-equipment maker Teradyne, and connector/sensor giant TE Connectivity.