JPMorgan Tech Upside Potential Hits 56% on AI Backlog Surge

JPMorgan forecasts 56% tech rebound from oversold levels, citing 150% AI backlog growth. Recommends healthcare for risk reduction and Chinese H-shares for AI infrastructure exposure.

Woofun AI reports that JPMorgan Asset Allocation maintains a bullish stance on "Tech + Cyclical" equity combinations while recommending healthcare sector additions to mitigate macro correlation risks. The firm identifies an oversold rebound opportunity in Technology, noting that forward P/E ratios for major US tech firms (excluding semiconductors) have fallen below two standard deviations from the 2018 mean, implying a potential 56% upside upon reversion to historical averages.

JPMorgan argues that market concerns regarding AI investment returns are overstated, highlighting a 150% growth in backlog orders for large-scale cloud computing companies, which outpaces 80% capital expenditure growth. The report emphasizes mean reversion opportunities in AI-related assets, particularly within Asia-Pacific markets like South Korea. For Cyclical sectors, the strategy shifts focus from Financials and Consumer goods to Industrial stocks, anticipating benefits from global economic improvement and AI-driven valuation reassessments.

Additionally, JPMorgan advises tactical allocation to Chinese H-shares due to lagging valuations relative to AI infrastructure trends, while cautioning against crowded positions in AI supply chains and noting record-high Asian refining margins driven by geopolitical uncertainty.