Stock market today: Stocks fall as investors rotate out of tech into Jackson Hole
Investing.com -- European semiconductor stocks remain a difficult place to invest, JPMorgan analysts say, pointing to persistent high inventories across the supply chain and lingering uncertainty in end-markets.
While overall semiconductor inventory fell to 133 days in the second quarter from 148 days in the first, this still stands 29% above pre-Covid levels, JPMorgan said in a Tuesday note.
“European semiconductors continue to be a difficult sector to invest in; although share prices are down from peaks, consensus estimates still do not fully reflect the shallow, uncertain recovery implied by inventory levels across the value chain and end-market commentary,” analyst Sandeep Deshpande wrote.
Auto and industrial-focused chipmakers are among the most exposed, with inventory at 179 days in the June quarter, roughly 55% above the 2015–2019 average.
Auto parts suppliers and industrial companies themselves are also holding stockpiles well above historic norms, with JPMorgan estimating that auto suppliers would need to reduce inventories by about 20% and industrial firms by roughly 12% to return to 2019 levels.
Pricing trends add to the cautious stance. Deshpande highlighted that power semiconductor pricing continues to decline, while microcontroller pricing only recently moved back into positive territory.
He said falling average selling prices, ongoing inventory corrections, and a weak macro backdrop—particularly with tariffs weighing on the automotive market—are set to pressure revenue growth at Infineon (OTC:IFNNY) Technologies (ETR:IFXGn) and STMicroelectronics (EPA:STMPA).
But despite the uncertainty, JPMorgan sees some relative opportunities.
It maintains Neutral ratings on Infineon, STMicro and Melexis (EBR:MLXS), while pointing to semi-equipment makers ASML (AS:ASML) and BE Semiconductor Industries (AS:BESI) as more defensive picks, citing ASML’s “relatively de-risked” outlook for 2026 and Besi’s potential order acceleration.
Overall, JPMorgan remains cautious, noting that inventories are stabilizing but at elevated levels, leaving little room for a sustained upturn in Europe’s semiconductor sector.