The Zhitong Finance App learned that on Thursday, J.P. Morgan Chase pointed out in the newly released “Retail Investor Watch” report that as US inflation data exceeded expectations and technology stocks continued to adjust, the risk appetite of US retail investors clearly weakened. In the week of October 8-14, retail net purchases were only 3.4 billion US dollars, far below the average of 6.7 billion US dollars per week over the past 12 months. However, despite overall retail buying weakening, some artificial intelligence (AI) and semiconductor leaders are still being sought after. Among them, Nvidia (NVDA.US) received about US$942 million in net purchases in a single week.
J.P. Morgan's strategy team, led by Arun J.P. J.P. J.P. J.P. J.P. J.P. J.P. J.P., J.P. J.P. J.P., Against the backdrop of a lack of positive catalytic factors and low market risk sentiment, retail capital inflows have further slowed. The report shows that the overall capital inflow intensity of retail investors last week was only at the 5th percentile of the historical distribution, indicating that buying power is at an extremely low level. Among them, the intensity of ETF capital inflows fell to the 2nd percentile, while individual stock trading was at the 21th percentile.
The US consumer price index (CPI) for September released on Wednesday further dampened market sentiment. According to J.P. Morgan Chase, the overall CPI rose about 0.65% month-on-month and 3.7% year-on-year in September. Among them, the month-on-month increase exceeded market expectations the most since March 2024. The core CPI rose about 0.33% month-on-month and 2.6% year-on-year, indicating that inflationary pressure is still stubborn.
Affected by this, the Nasdaq 100 index fell about 2% on Wednesday, and the S&P 500 index also ended the record of not showing a one-day decline of more than 1% for several consecutive trading days.
Economists at J.P. Morgan Chase expect the core personal consumption expenditure (PCE) price index to rise 0.31% month-on-month and 3.1% year-on-year in September. The bank believes that this level of inflation is sufficient to make the Fed's interest rate hike in October an option to consider, but its benchmark forecast is that the Fed will raise interest rates again in December.
Retail investors withdrew from tech ETFs but still selectively bought individual semiconductor stocks
Technology stocks are the area with the most obvious recent changes in retail investment behavior. The report points out that with the semiconductor sector's cumulative decline of about 9% last week, the previous re-inflow of funds into technology ETFs quickly reversed.
According to J.P. Morgan Chase data, retail investors' capital flow index for technology ETFs plummeted from the 73rd percentile the previous week to the 4th percentile, indicating that investors have switched from active purchases to obvious sales. Among them, Direxion Semiconductor tripled the daily ETF (SOXL.US) and iShares semiconductor ETF (SOXX.US) as the main sales targets.
At the same time, momentum strategy ETFs also experienced capital outflows, and the iShares MSCI US Momentum Factor ETF (MTUM.US) was one of the main drags. J.P. Morgan pointed out that since October, the momentum factor performance has continued to weaken. The main reason is that it focuses on speculative growth stocks and semiconductor stocks, and the performance is lower than that of the bear group, which mainly focuses on software stocks.
However, in contrast to the sell-off in technology ETFs, retail investors still maintain a strong interest in buying some individual technology stocks. According to the data, retail investors' net purchases of ETFs reached 3.2 billion US dollars last week, while net purchases of individual stocks were only 200 million US dollars, reflecting that investors as a whole still prefer to allocate assets through ETFs.
At the individual stock level, the technology sector is one of the few areas receiving a net inflow of capital. In addition to the “Big Seven” of US stocks, retail investors are also concentrating on buying some stocks related to semiconductors, memory chips, and AI infrastructure.
Among them, Nvidia became the most popular stock among retail investors, with a weekly net purchase amount of US$942 million. Google's parent companies Alphabet (GOOGL.US), Tesla (TSLA.US), Apple (AAPL.US), Amazon (AMZN.US), and Meta (META.US) received net purchases of approximately US$132 million, US$111 million, US$74 million, US$53 million, and US$39 million, respectively.
In contrast, Microsoft (MSFT.US) had a net sale of about $15 million from retail investors. Among other technology stocks, SanDisk (SNDK.US) received about US$238 million in net purchases, and Broadcom (AVGO.US) received about US$139 million in net purchases.
Retail investors' choices within the semiconductor sector are clearly divided. Micron Technology (MU.US) had a net sale of about US$123 million, and AMD (AMD.US) had a net sale of about US$70 million, indicating that retail investors did not indiscriminately undercut the entire semiconductor sector.
J.P. Morgan pointed out that retail investors have recently returned to their previous trading model, which is to sell software stocks while selectively buying semiconductor and hardware stocks after the pullback. There is a certain difference between this allocation direction and the broader trend of institutional investors' positions.
It is worth noting that although retail investors have suffered losses due to recent technology stock adjustments, the related investment portfolio has maintained a relatively leading performance since this year, as investors increased their holdings of semiconductor and memory chip stocks as early as May and switched to hyperscale cloud computing companies after large technology companies announced strong results in the second quarter.
The financial, industrial and consumer sectors were sold off, and capital was further concentrated on AI leaders
With the exception of technology stocks, retail investors are generally cautious about other major sectors. According to J.P. Morgan Chase data, the financial sector had net sales of about US$330 million from retail investors last week, a net outflow of about US$302 million from the industrial sector, a net outflow of about US$240 million from the non-essential consumer goods sector, and a net outflow of about US$186 million from the healthcare sector.
The utilities sector has also continued to be sold off by retail investors since mid-late August, while industrial stocks faced further selling pressure after the third quarter earnings season began.
From the perspective of thematic investment, retail capital is still mainly concentrated in AI data centers, electrification, technology giants, growth stocks, and stocks related to AI commercialization, indicating that AI is still an important investment line to attract retail capital.
However, the divergence in capital flows means that retail investors' attitude towards AI investment has moved from a broad rise in the past to more careful individual stock screening.
J.P. Morgan is optimistic about semiconductor financial performance, Broadcom and Mywell are still the first choice
As the 2026 third quarter earnings season begins, J.P. Morgan believes that the semiconductor industry will become the focus of market attention. The bank expects 62 S&P 500 companies to announce their results in the next seven days. The total market capitalization will account for about 14% of the total market value of the index, mainly in the financial and industrial sectors.
Regarding the semiconductor industry, J.P. Morgan Chase maintains a cautious and optimistic judgment. It is expected that most of the covered companies will still be expected to hand over steady performance and provide positive future guidance, continuing the trend of past few quarters where both results and guidance have exceeded expectations.
However, the bank emphasized that the market's focus on the semiconductor industry is shifting from strong demand to supply constraints, including when capacity bottlenecks in advanced process foundry, memory chips, etc. can be mitigated, and when additional production capacity can effectively meet demand.
In terms of stock selection, J.P. Morgan continues to rank Broadcom (AVGO.US) and Maywell Technology (MRVL.US) as the first choice in the semiconductor industry, while also focusing on companies such as Nvidia, AMD, Micron Technology, and SanDisk.
The bank believes that companies that have AI business exposure, benefit from tight supply, have strong pricing capabilities, or can benefit from the cyclical recovery of the industry are more likely to see an increase in profit forecasts.
Furthermore, J.P. Morgan specifically mentioned the latest performance of lithography giant ASML.US (ASML.US).
Asmack's gross margin for the third quarter reached 57.5%, higher than previous guidance. Fourth-quarter sales, gross margin, and profit before interest and tax guidelines all exceeded market expectations. According to J.P. Morgan Chase, the growth rate implied by the median value of Asmack's 2026 growth guide is about 36%, which is higher than the bank's forecast of about 31% in the global wafer manufacturing equipment market, indicating that the company is expected to continue to outperform the overall industry.
What is more noteworthy is that Asmack's recent orders have exceeded the level that can be fully satisfied by its current 2027-2028 production capacity, so the company is considering increasing the capacity expansion in 2028 to more than 30% of the previous plan.