JPMorgan Favors Technology, Sees Opening in AI Supply Chain

JPMorgan’s equity strategy favors technology over energy and defensive sectors, and sees a potential opening among upstream artificial intelligence suppliers after concentrated selling pressure in those businesses.

The bank recommends buying stocks that performed strongly over the past 12 months while shorting stocks that led over the past three months. Its outlook also sees less appeal in low-volatility stocks overall.

For investors who continue holding low-volatility shares, health care ranks first in JPMorgan’s preferences, followed by utilities and consumer staples. High oil prices, borrowing costs and housing shortages continue to weigh on consumer cyclical stocks, though the bank has a positive long-term view of apparel, restaurants and retail.

JPMorgan sees limited near-term upside for large cloud providers. Over the medium term, tighter computing supply may improve their pricing power, margins and cash flow.