JPMorgan Chase says the artificial intelligence trade is entering a more competitive and financially demanding phase, as markets shift from rewarding broad innovation narratives to scrutinizing balance sheets and cash generation.
In a new Bloomberg Technology interview, JPMorgan global market strategist Stephanie Aliaga says investors are becoming more selective after several years in which AI acted as a rising tide across technology stocks.
“And I think moving forward, markets are realizing this is going to be less of a competition on just the innovation, although the innovation is really important, but also on balance sheets. And you have to show me the money.”
Aliaga says the shift creates tension for companies trying to balance near-term cash generation with long-term AI growth ambitions, particularly as capital-intensive infrastructure buildouts accelerate.
“This kind of desire for markets to really see companies with AI-tied cash generation is a tricky environment to be in, because if you want to see growth from AI, but cash, you might need to actually let go in the near term to invest in some of these infrastructure buildouts to ultimately get the growth that we’re looking for.”
According to Aliaga, investors are now more discerning as they start to look for winners in the different spaces of the AI buildout.
“We had three years of AI providing this really powerful tide lifting a lot of boats. And this year, we’ve seen a lot more discernment amongst these names. We think that can continue. Now it doesn’t mean that it isn’t still a rising tide, but we’re now seeing the different markets here: the markets around models, the markets around cloud services and the markets around infrastructure. And now we want to see who are going to be the leaders, who are going to be the companies that actually capture the best economics in each of these markets.
So it’s not necessarily zero-sum, but now competition is really ratcheting higher.”
JPMorgan is not alone in the view that 2026 will be the year when investors pick the winners and losers of the AI trade. Just last week, Morgan Stanley said that it sees 2026 as a “show me the money moment” for AI, with investors demanding tangible financial returns on investments.
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