JPMorgan Chase sees an alarming resemblance between the AI market and the dot-com bubble

Jason Hunter, a strategist at JPMorgan Chase, the largest U.S. bank, pointed out an alarming divergence in the performance of artificial intelligence-related stocks: In 2026, investors were actively investing in chip manufacturers, but were not as eager to invest in the largest tech companies, which spend the most on infrastructure for neural networks, according to Business Insider.

While shares of computer hardware suppliers have surged since January, the basket of stocks comprising the “Magnificent Seven” tech giants has retreated from its highs, and Microsoft and Meta Platforms have even fallen into negative territory, despite massive investments in AI. In particular, Microsoft’s market capitalization has fallen by more than 20% this year.

This market divergence mirrors the scenario of 1999, when network equipment suppliers experienced “parabolic growth,” while the stocks of companies that had made major capital investments in this sector plummeted from their peak levels, Hunter noted. The dot-com bubble burst in early 2000—less than a year after this divergence was first observed, the strategist recalled.

“The growing contrast and frankly negative trend in the stock prices of hyperscalers are reminiscent of the situation in 1999–2000,” Business Insider quotes Hunter as saying. “This situation is prompting us to focus on the charts of individual tech giants to see if these stocks can find a foothold this summer and, perhaps reduce the risk that, as fall approaches, the market will face a downturn triggered by investor sentiment and positioning.”

Meta, Microsoft, Amazon, and Alphabet plan to spend approximately $725 billion on capital expenditures this year—77% more than in 2205. Forecasts suggest their spending will continue to rise. Investors are skeptical about the return on such investments: last month was Microsoft’s worst in the past 25 years.

This article was AI-translated and verified by a human editor