JPMorgan Chase raises its S&P 500 target to 7800 points, while warning of AI-driven crowded trading.

According to Mars Finance, on June 25th, JPMorgan Chase raised its year-end forecast for the US stock market, but also cautioned investors that the crowding of AI-related momentum stocks is becoming the most vulnerable part of the market. The JPMorgan Chase strategy team, led by Dubravko Lakos-Bujas, raised its year-end 2026 target for the S&P 500 from 7,600 to 7,800 points, citing continued upward revisions to corporate earnings expectations and a near doubling of AI capital expenditures. The bank stated that consensus earnings forecasts for 2026 and 2027 have both been revised upwards by about 10% since the beginning of the year, a magnitude typically seen only in the recovery phase after a recession or major shock. However, JPMorgan Chase did not interpret this upward revision as a risk-free market. The bank pointed out that low-quality growth stocks, speculative growth stocks, and second- and third-tier AI concept stocks have become "extremely crowded," and a rapid correction could be triggered if funds withdraw. Strategists also noted that increased equity supply in the coming quarters, along with potentially tighter monetary policy, could limit further valuation expansion. In terms of allocation, JPMorgan recommends a barbell strategy: holding high-quality growth stocks and direct AI beneficiaries on one end, and allocating low-volatility, high-quality stocks as a portfolio buffer on the other. The bank remains optimistic about technology, some industrial, utilities, defense, banking, and some healthcare growth stocks, but believes the market's upward path will not be linear.