JPMorgan warns AI-driven stock momentum echoes dot-com era extremes

JPMorgan warns that the current AI-led momentum rally in US equities is among the largest and fastest seen in 40 years, drawing comparisons with the 1999 dot-com bubble. The bank says gains are increasingly concentrated in a narrow set of AI-linked names, with momentum decoupling from valuation and quality, a sign that investors may be chasing price action rather than fundamentals. JPMorgan also flags rising volatility in momentum-heavy markets, including recent swings in Korean memory-chip stocks, and advises investors to rotate toward value and diversify geographically. Despite these risks, the bank says Q2 S&P 500 earnings growth remains strong at roughly 38% year over year, or about 19% excluding paper gains tied to hyperscalers’ private AI investments, with semiconductor spending driving much of the growth.