JPMorgan Chase Raises S&P Target to 7800 Points, Warns of AI Crowded Trades

BlockBeats News, June 25th: JPMorgan Chase raised its year-end outlook for the U.S. stock market, but warned investors that the crowded trades in AI-related stocks are becoming the market's most vulnerable area.

Lead by Dubravko Lakos-Bujas, JPMorgan's strategy team raised the S&P 500's year-end target for 2026 from 7,600 points to 7,800 points, citing continued upward revisions to corporate earnings expectations and a nearly doubling of artificial intelligence capital spending. The bank stated that earnings expectations for 2026 and 2027 have been raised by about 10% since the beginning of the year, a magnitude that usually only occurs in the recovery phase following a recession or a major shock.

However, JPMorgan did not interpret this upward revision as a risk-free situation. The bank pointed out that low-quality growth stocks, speculative growth stocks, and second- to third-tier AI concept stocks have become "extremely crowded," and once funds are withdrawn, a rapid pullback may be triggered. Strategists also mentioned that the increase in equity supply over the next few quarters and the possibility of a tighter monetary policy could limit further valuation expansion.

In terms of allocation, JPMorgan recommended adopting a barbell strategy: holding high-quality growth and direct AI beneficiaries on one end, and allocating low-volatility, high-quality stocks as a portfolio buffer on the other end. The bank remains positive on the outlook for the technology sector, some industrial stocks, utilities, defense, banks, and certain healthcare growth stocks, but believes that the market's upward path will not be linear.