Investing.com -- Rising volatility and elevated investor exposure in semiconductor stocks are creating conditions for more frequent and disruptive selloffs, according to JPMorgan's quantitative strategy team.

Analyst Nikolaos Panigirtzoglou warned in a note on Thursday that the combination of rising semiconductor volatility and stretched positioning is "raising the risk of more frequent semiconductor 'VaR shocks' from here," pointing to the episode seen during the first week of June as a recent example of how quickly the unwind can materialize.

JPMorgan identified two structural challenges stemming from the sector's meteoric rise in equity indices.

The first is concentration risk, where the growing share of semiconductor stocks "can become binding for funds with self-imposed risk limits," forcing mechanical selling when thresholds are breached.

The second is valuation, with the bank explaining that the ratio of semiconductors' market capitalization share to their revenue share in global equity indices has surpassed 6x, more than double the equivalent ratio for the Magnificent Seven stocks, calculated by replacing Tesla with Broadcom, within the S&P 500.

Panigirtzoglou also flagged a separate near-term technical risk, estimating around $165 billion of equity selling and bond buying due to quarter-end and month-end rebalancing at June close, a flow dynamic that could amplify any volatility in the semiconductor space.

On crypto, JPMorgan noted that heightened hash rate sensitivity to bitcoin prices points to more miners currently operating near their breakeven zone, adding another pocket of fragility to the broader risk landscape.