{"id":435818,"date":"2026-08-10T17:13:12","date_gmt":"2026-08-10T10:13:12","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/jp-morgan-says-not-to-worry-on-the-ai-trade-just-yet-435818\/"},"modified":"2026-08-10T17:13:12","modified_gmt":"2026-08-10T10:13:12","slug":"jp-morgan-says-not-to-worry-on-the-ai-trade-just-yet","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/jp-morgan-says-not-to-worry-on-the-ai-trade-just-yet-435818\/","title":{"rendered":"JP Morgan says not to worry on the AI trade just yet"},"content":{"rendered":"
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As we were approaching the end of July, it looked like the AI rally and tech shares were going to be in for a rough summer. But fast forward to two weeks later, suddenly we’re talking more about fresh record highs again than any concerns that might put a dent to the overall market sentiment.<\/p>\n

There’s no doubt that the latest earnings round from hyperscalers in particular has helped to alleviate investor concerns, or at least cast them aside for the time being.<\/p>\n

For a while now, the story has been can all the massive investment on AI pay off for tech firms – especially big tech? The major worry is that the massive outlay in terms of capital expenditure on AI would grow too big, with returns not being able to catch up.<\/p>\n

Alphabet (Google) kicked off the earnings season in playing to that narrative, recording its first ever quarter with negative free cash flow as a public company. But come the end, other tech firms took that as a learning lesson and told investors what they needed to hear. That being capital expenditure on AI is under control and that the money will come through.<\/p>\n

And JP Morgan is pointing to exactly that as carrying the AI trade to its next leg higher from here. The firm notes that:<\/p>\n

“As elevated backlogs convert into recognised revenue, cloud growth should remain well supported, helping validate rising AI capex, strengthen order coverage, and further ease ROIC (return on invested capital) concerns.”<\/p>\n

Adding that the benefits of rising AI investment were much clearer in Q2 this year, especially among the likes of Amazon and Microsoft which saw strong cloud growth, larger backlogs, and better cash-flow visibility. All of which JP Morgan says should further ease any major worries about the massive spending that is still ongoing.<\/p>\n

That is leading the firm to revise higher their year-end forecast for the S&P 500 to 8,000 now. However, they are maintaining the forward valuation multiple target at about 20 times in citing geopolitical risks and higher interest rates among key potential headwinds for the market.<\/p>\n

That being said, their bullish call more or less extends to next year with JP Morgan seeing EPS for 2026 at $365 (previously $350) and $420 for 2027 (previously $390).<\/p>\n

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This article was written by Justin Low at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

As we were approaching the end of July, it looked like the AI rally and tech shares were going to be in for a rough summer. But fast forward to two weeks…<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-435818","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/435818","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=435818"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/435818\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=435818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=435818"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=435818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}