JPMorgan is positive on semiconductors ahead of the second quarter earnings reporting season, arguing that continued demand for cloud and data centers are driving growth in the industry.
"We anticipate most companies to report June quarter results that are better than consensus estimates and in line with our own research efforts and recent industry data from the Semiconductor Industry Association (SIA)," wrote JPMorgan analyst Harlan Sur. "[The data] suggests the industry grew 3-5% Q/Q versus historical average of 3% Q/Q."
Looking ahead into the third quarter, JPMorgan's research team expects its portfolio of semiconductor firms to drive seasonal 5 to 7 percent revenue growth from the prior quarter. The analyst noted that much of the expected gains are derived from continued investment in data processing and storage companies.
Here are three of JPMorgan's top "overweight" semiconductor stock picks.