JPMorgan Strategist Sees an Opening in AI Suppliers After Selloff

JPMorgan's global markets strategy chief sees a concentrated selloff in upstream artificial intelligence companies as an opening and favors technology stocks over energy and defensive sectors.

His proposed positioning would favor stocks with strong results over the past 12 months while taking short positions in stocks that gained strongly over the latest three months. The framework reflects a preference for technology to outperform energy and defensive groups.

For large cloud providers, he sees limited room for near-term gains. Over the medium term, tighter computing capacity may strengthen their pricing power and support profit margins and cash flow.

He sees low-volatility stocks as less attractive. If he continues allocating to that group, he prefers health care, followed by utilities and consumer staples.

High oil prices, borrowing costs and a shortage of housing weigh on consumer cyclical stocks. His longer-term sector preferences include apparel makers, restaurant companies and retailers.

The view adds an upstream-company focus to earlier JPMorgan analysis of AI-stock positioning.