However, Goldman Sachs is not as bearish as JPMorgan.

JPMorgan Chase strategists have issued a cautionary warning that the current widespread surge in stock market values, fueled by the fascination with artificial intelligence (AI), may be on the verge of collapsing. Despite the remarkable rise in stock prices driven by AI-related hype, JPMorgan (NYSE: JPM) argues that there is little solid evidence of AI significantly boosting corporate earnings.

The surge in stocks, especially those of major technology companies, is being labeled as an “AI-driven bubble” which originated from the popularity of chatbots that often prove ineffective in handling basic queries. JPMorgan predicts that the market will experience a decline as it reevaluates the lingering impact of higher interest rates, erosion of personal savings, and a troubling geopolitical backdrop, all contributing factors to the market’s worst performance in over a decade in 2022. (Forbes)

On the other hand, Goldman Sachs (NYSE: GS) analysts have a contrasting view, pointing out that the S&P 500 has recorded impressive gains, primarily attributed to major AI players like Nvidia, Alphabet, and Microsoft. They argue that the concentration of gains in a few tech giants could justify a broader rally among stocks that have not yet experienced a surge. According to Goldman’s forecast, if the price-to-earnings multiple of the S&P constituents not named Alphabet (NASDAQ: GOOGL), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), Meta (NASDAQ: META), Nvidia (NASDAQ: NVDA), or Tesla (NASDAQ: TSLA) increases from the current level of 17x to 19x, the S&P will reach an all-time high.

In this uncertain market climate, JPMorgan chief markets strategist Marko Kolanovic suggests that commodities might offer a good entry point, as they are currently priced to reflect the highest risk of recession and stand out as undervalued, under-owned, and supported by compelling fundamentals and technicals.

Related Story:  Apple Said To Be Working On Apple GPT, It’s Own Generative AI Model

Photo by Aaron Burden on Unsplash