J.P. Morgan Private Bank is bullish on four US stock sectors amid the ongoing capital expenditure trend.

Abigail Yoder, an equity strategist at the financial giant, says in a new analysis that the bank is positive on financials, industrials, information technology, and utilities and energy infrastructure.

Yoder notes financials are in a good place to absorb market volatility.

“Large, high-quality banks remain well positioned in the current rate environment, which we describe as ‘higher-for-longer but stable.’ Net interest margins continue to benefit from elevated rates and a steepening yield curve. Resilient credit fundamentals and strong capital positions support earnings durability and downside resilience.”

In terms of industrials, Yoder says defense spending, infrastructure buildout, AI-related capex and reshoring initiatives are all driving structural demand.

“Money is moving into a range of capital-intensive industries, from power equipment and construction to various types of advanced manufacturing. Together, they illustrate the breadth and depth of the industrial cycle.”

The strategist notes that information technology has been the core driver of S&P 500 earnings.

“Recent valuation compression reflects macro volatility and not a deterioration in fundamentals. As we’ve discussed, we see a bright outlook for tech earnings, underscoring the sector’s role as a central pillar of growth and innovation in the U.S. economy.”

Finally, Yoder says utilities and energy infrastructure are increasingly exposed to structural demand.

“Electrification, AI-driven power consumption and grid modernization are shining a spotlight on the economy’s need for long-term energy investment and the sector’s strong earnings prospects.

Forecasters project that electricity demand will exceed current generation capacity over the coming years… A sustained supply-demand imbalance will support companies’ pricing power. We think it will also underpin a multi-year investment cycle across electricity generation, transmission and grid infrastructure.”

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A Bank of America strategist is sounding the alarm about the stock market, warning that equities are flashing signals that have often foreshadowed a 20% correction.

In an investor note, BofA’s head of US equity and quantitative strategy, Savita Subramanian, urges investors to “take profits,” warning that she’s seeing “too many red flags” in the market, reports Axios.

“Our bear market signposts — the triggers that typically precede an S&P 500 peak — suggest additional caution may be warranted. Today, 70% of our signposts are triggered, in line with the average observed in prior market peaks.”

Subramanian says the signposts are market condition gauges, including the investor assumption that companies will continue to generate profits at a strong pace in the coming years, as well as relaxed credit conditions. She also highlights that she’s seeing very high dispersion in the performance of stocks with high and low price-to-equity ratios, meaning high-valuation stocks are being rewarded, while low-valuation stocks are being left behind.

“Dispersion has been most pronounced within Tech, where the spread between the best/worst-performing quintiles’ median stock is a whopping +120 [percentage points], the highest since Feb. 2000, which reached +130 [percentage points] ahead of the market peak of March 24, 2000.”

Meanwhile, Morgan Stanley CIO Mike Wilson says he doesn’t believe that the stock market will enter bear territory. He says, “In our view, a correction was inevitable and ultimately healthy if this bull market is going to extend into year-end, which remains our baseline.”

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A Bank of America Securities senior semiconductors analyst is bullish on multiple artificial intelligence (AI) chip companies despite the market’s correction.

In a new interview on CNBC Television, Vivek Arya says that chip companies still have a lot more upside.

Arya believes Nvidia (NVDA), which closed at $208 on Tuesday, may soon soar to $350, a more than 68% increase.

He also predicts Credo (CRDO) will increase more than 7% from its Tuesday close of $234.

Arya’s other top chips trades includes Analog Devices (ADI) with a price target of $460, a more than 13% increase from its $404 value at time of writing, and Texas Instruments (TXN) with a price target of $370, a more than 28% increase from its current value of $288.

Arya believes that the demand for AI-infrastructure is not slowing down, setting chip companies up for future rallies.

“Right now, what we are seeing is that the usage of this [AI] infrastructure is exceptionally high. In fact, the likes of OpenAI and Anthropic, they are trying to buy computing capacity wherever they can find it. There is hardly a single GPU (graphics processing unit) out there that is not 100% utilized. There is no dark GPU. There is no dark compute.”

The analyst also says that AI chips demand will persist over multiple years.

“The important thing the industry is doing is planning for multiple years out. There is already a road map that goes out for the next two or three years, and you have these pools of excellence, whether it is in the specific kinds of memory chips, whether it’s in the specific kind of wafers. For example, there is only one Taiwan semiconductor that is helping provide leading-edge wafers to the entire accelerator industry. When you have that one person who is controlling a lot of this production, it is very hard to double order and create that overbuild. what we are seeing is a combination of very strong demand and very disciplined supply coming to the market … that’s why the cycle is a lot more durable.”

Lastly, the analyst says that several semiconductor companies are undervalued at their current stock prices.

“The three largest companies that I cover – Nvidia, Broadcom, Micron – they are all trading below market multiple right now. This isn’t a case where valuation has gone completely out of control. The growth rates are still able to justify much more upside to these semiconductor stocks.”

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