JPMorgan (JPM) Warns of 'VaR Shock' Risk in Crowded Semiconductor Trade

JPMorgan (JPM) strategists warn of increasing "tantrum" risk in semiconductor stocks, citing a potential "VaR shock" as volatility rises despite the sector's rebound to new highs the week of June 16, 2026. The firm's team, led by Nikolaos Panigirtzoglou, indicates that a growing number of VaR-sensitive investors could trigger self-reinforcing sell-offs. The Philadelphia Semiconductor Index (SOX) recovered from an over 10% decline in early June 2026, driven by AI overheating concerns, to reach new record highs. This rebound coincides with Bank of America's recent survey, which identifies long positions in chip stocks as the most crowded trade among fund managers. JPMorgan strategists highlight that volatility typically climbs before a VaR shake-up, a trend observed ahead of the early June decline, often accompanied by dwindling market liquidity. Additionally, elevated valuations pose a significant challenge, with semiconductor stocks' weight in global indices growing six times faster than their revenue share, exceeding the S&P 500's "Magnificent Seven" by more than double.