The Zhitong Finance App learned that according to J.P. Morgan's trading team, another round of explosive profits and steady development of artificial intelligence giant Nvidia (NVDA.US) means that the S&P 500 index may still have room for further growth.
“While the topic of artificial intelligence is still gaining momentum and macroeconomic assumptions still valid, we are likely to continue to hit record highs,” the team, which includes US head of market intelligence Andrew Tyler, wrote in a report to clients. He believes that trending or higher-than-trend GDP growth, positive profits, and the Federal Reserve's suspension of interest rate hikes are all “recipes” for a bull market.
On Thursday, the S&P 500 index rose slightly and eventually closed down 0.74% after Nvidia released higher-than-expected sales forecasts, pushing its stock price above the $1,000 mark. The S&P 500 index has risen close to 5% since May, mainly driven by strong earnings reports from US companies and the expectation that the Federal Reserve will relax its policy before the end of the year.
Chipmaker Nvidia is an important driving force in the stock market and the key to the promotion of artificial intelligence. The company's stock price jumped more than 9% after issuing an optimistic sales forecast, showing that AI investment spending is still strong. This year, Nvidia contributed about a quarter of the increase in the S&P 500 index.
J.P. Morgan traders believe that although the increase may slow down, the upward momentum of the S&P 500 index will continue, as investors will seek investment opportunities in artificial intelligence in smaller sectors, and the rise in the stock market will expand beyond large-cap technology stocks.
Tyler suggests a dumbbell portfolio strategy, including the “Big Seven” and semiconductor companies, as well as value stocks and cyclical stocks such as banks, credit card companies, car manufacturers and their suppliers and homebuilders.
This optimism is once again at odds with Marko Kolanovic, the bank's chief market strategist. The latter said a few days ago that given a range of risks such as overvaluation, stubborn inflation, and geopolitical uncertainty, he does not currently consider stocks an attractive investment.
Although it's not unusual to hold different opinions within the same company, internal divisions within J.P. Morgan Chase have become more apparent since last year. Tyler correctly predicted the all-time high, and the collapse predicted by Kolanovic has yet to come true.