Catenaa, Saturday, October 10, 2026- A Basket of 42 AI stocks accounts for 58% of all S&P earnings growth since January 2024, JP Morgan’s Cembalest said.
According to JP Morgan Asset Management Strategist Michael Cembalest, a basket of 42 AI stocks accounts for 60%-80% of all S&P earnings growth, price returns and capital spending since January 2024.
Cembalest said the basket of 42 AI stocks accounts for 67% of price returns in the S&P 500, while it accounts for 87% of capital spending.
Moreover, Cembalest said that 60% of S&P 500 stocks are down 20% or more from their all-time highs despite the market being close to all-time highs.
He also said only 30% of stocks are outperforming the S&P 500, one of the lowest figures since 1991, while AI is primarily benefiting 55 supply-chain companies rather than the companies adopting it.
The JP Morgan strategist said that the technology share of GDP growth has risen from almost zero in 2022 to 33%.
“Only 20% of US states are growing faster than the national average, almost the lowest figure since 1979,” he said.
He added that AI is the only positive trend in US construction spending, up 38% since January 2024, but “unfortunately, the other three main categories are down since then (manufacturing -28%, commercial real estate -13% and residential -6%). That’s why the decline in planned data center projects is worth watching.”
Cembalest cautioned that technology valuations were not necessarily inexpensive, but since January 2024, when the AI boom began to take off, technology stocks worldwide have mostly been driven by earnings growth rather than P/E multiple expansion.
Cembalest argued that earnings-driven stock gains may be more resilient than advances primarily supported by rising valuation multiples.
“I had a sense of foreboding on the SpaceX IPO given the track record of other large IPOs since 2010 as lockup expirations approached, but SpaceX is holding up better than most after 116 days,” he added.
“Maybe it’s too early to judge since only 20% of SpaceX shares have been released into the free float,”
