JPMorgan sees room for US stocks to climb further this year, but says the path to a true melt-up depends on whether growth spreads beyond a narrow slice of the market.
Speaking in a new CNBC interview, JPMorgan Private Bank co-head of global investment strategy Stephen Parker lays out what separates the firm’s base-case outlook for the S&P 500 from its more aggressive bull-case scenario.
Parker says JPMorgan’s base case assumes solid earnings growth, but little help from valuations. Under that view, the S&P 500 delivers high single-digit returns, landing roughly in the 7,200 to 7,400 range.
But Parker says the S&P 500 could explode to as high as 8,000 to 8,200, driven by broader earnings participation and tangible AI-driven productivity gains rather than tech alone.
“To get to that bull case, we need a couple of things. We need this broadening cyclical recovery to happen. We need to see earnings growth not just out of the tech sector but other parts of the economy. We need to see some of the productivity benefits from AI turn from talk into action when it comes to companies.
And we think if you get that, investors will be willing to pay that higher multiple. You get potentially a little bit of expansion on top of mid-teens-type of earnings growth, that’s what gets us to that bull case scenario.”
In a recent interview, Fed Chair nominee Kevin Warsh said that AI’s economic impact is starting to show up in a handful of companies. But he said the AI-driven productivity boom will likely be anecdotal for now, and it might take time for the data to reflect the gains.
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.