However, there also appears to be positive sentiment among analysts who feel that this bearish outlook could be overblown. Shares of Applied Materials (AMAT) were higher today by almost 1%, which was contrasted by a pedestrian 0.35% loss in SOXX.

Where other analysts spy weakness in the semiconductor industry, others are seeing growth.

“We believe the current semiconductor capital spending environment is in the midst of expansion,” J.P. Morgan analyst Harlan Sur wrote in a note.
“Equipment stocks are down 30-45% since the peak in March which is a similar magnitude to the 2012/2013 and 2015/2016 down cycles, and suggests limited downside from current levels,” Sur added. “The market is already discounting a significant decline in equipment spending next year.”
Sur cited various factors, including a gain in market share that could boost shares of AMAT.

“We believe a combination of market share gain, incremental revenue opportunity, broader product portfolio, increased penetration with existing customers, increased wafer capital intensity at foundry/logic/memory, and exposure to the fast-growing display market will drive growth for AMAT over the next two to three years,” said Sur.

Nonetheless, whether this remains an isolated benefit where the rest of the semiconductor industry falters remains to be seen. Until then, it will be interesting to watch how SOXL and SOXS react to the upcoming third-quarter results.

For more market trends in technology, click here.

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