J.P. Morgan analysts predict a rebound in global AI trade, citing cleaner investor positioning and attractive valuations that could spur renewed capital spending.
J.P. Morgan analysts see a potential bounce‑back in global AI trade after a recent slowdown, pointing to cleaner investor positioning and valuations that could reignite capital spending.
Why AI trade has faltered
The slowdown stemmed from heightened risk aversion among tech investors, tighter financing conditions and a wave of disappointing earnings from AI‑focused firms.
Improved investor positioning
J.P. Morgan notes that fund managers have trimmed exposure to over‑valued AI stocks, creating a more balanced portfolio mix that could support a steadier inflow of capital.
Valuation incentives
Current price‑to‑earnings multiples for many AI companies are below historic highs, offering a margin of safety that may attract both growth‑oriented and value‑seeking investors.
- Lower cost of capital for AI startups
- Increased corporate R&D budgets for AI integration
- Growing demand for AI services in emerging markets
“We expect a gradual re‑acceleration of AI‑related capital flows as investors regain confidence in the sector’s fundamentals,” said a J.P. Morgan research analyst.
The bank’s outlook suggests that, barring major macro‑economic shocks, AI trade could regain momentum over the next 12‑18 months, bolstering both hardware manufacturers and software providers.
Reuters coverage of Global AI trade could revive after recent pullback