LIVE MARKETS-AI mania powers Wall Street as JPMorgan warns of fragile foundations
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AI MANIA POWERS WALL STREET AS JPMORGAN WARNS OF FRAGILE FOUNDATIONS
The artificial intelligence boom that's turbocharged markets since 2023 is showing no signs of slowing, but analysts at JPMorgan Private Bank JPM.N said investors should buckle up for turbulence ahead.
In its 2026 outlook, the bank calls AI "the most transformative technology since computing," projecting that hyperscalers' capital spending could top $500 billion next year - triple 2023 levels - as firms race to build data centers and secure scarce power.
"AI is driving more GDP growth than consumer spending," the report notes, citing OpenAI's trillion-dollar infrastructure ambitions and sovereign mega-projects from Washington to Beijing. Yet JPMorgan stops short of calling it a bubble - for now. While froth is building in private markets, public valuations still lean on earnings growth, not hype. Nvidia's stock NVDA.O, for instance, rose 14-fold in five years while earnings surged 20-fold.
The optimism comes with caveats. Power shortages, water constraints and regulatory scrutiny could slow the AI juggernaut, while labor markets brace for disruption. JPMorgan estimates 60% of developed-world jobs face some level of automation risk, though history suggests new roles will emerge as old ones vanish.
Next year may deliver solid returns, but the era of easy bets is over. "The biggest risk," JPMorgan notes, "is not having exposure to transformational technology."
(Pranav Kashyap)
EARLIER ON LIVE MARKETS:
EARLY SIGNALS OR JUST SMOKE? SOME SAY FUNDAMENTALS STILL HOLD CLICK HERE
BEYOND THE LABEL: ARE EUROPE'S LUXURY GIANTS OUT OF FASHION? CLICK HERE
MAPPING MARKETS: WHAT COMES NEXT AFTER THE SELLOFF? CLICK HERE
FLEXIBILITY OR NECESSITY? THE GIG ECONOMY'S GROWING ROLE IN TOUGH TIMES CLICK HERE
S&P 500 INDEX AND THE RESILIENCE OF ITS 50-DMA CLICK HERE
U.S. CORPORATE SENTIMENT KEEPS GETTING BETTER CLICK HERE
EUROPE'S EARNINGS POISED FOR A REBOUND – JPM CLICK HERE
BUDGET FLIP-FLOPPING IS MAKING UK MARKETS LESS ATTRACTIVE CLICK HERE
STOCKS STRUGGLE BEFORE LONG-AWAITED DATA DELUGE CLICK HERE
EUROPE BEFORE THE BELL: CAUTIOUS START, US DATA LOOMS LARGE CLICK HERE
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