The investment banking arm of TD Bank believes the market cap of JPMorgan will soar to $1 trillion as it leverages artificial intelligence (AI).
In a new CNBC interview, TD Cowen bank analyst Steven Alexopoulos says investors are currently positioning in tech stocks to capture the upside potential of AI.
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The analyst notes that investors are likely underexposed to stocks that he thinks will rally once AI becomes widely adopted for commercial use.
“When you think about where we are right now with AI, we’re at the builder level. The focus is Nvidia, the focus is OpenAI, the builders. I believe we’re inside of two years, maybe one, where the focus will widen out from the builders to who is going to use this technology to unlock massive economic value.
That’s exactly what we saw on the internet. As the internet was being built, the focus was on Cisco, IBM, and as the layer was built, it moved to Google with search and Amazon selling commerce. When you think about the S&P 493… You need to focus on sectors that are reliant on people, knowledge workers, that is what will be disrupted by artificial intelligence.”
According to the TD Cowen analyst, banks are poised to be major beneficiaries of AI advancements, with JPMorgan expected to lead the charge.
Alexopoulos says that while JPMorgan’s head of consumer banking, Marianne Lake, expects the division’s headcount to decline by about 10% over the next five years, he believes that projection is conservative and anticipates a 20% reduction instead. According to Alexopoulos, JPMorgan’s growth will continue despite the significant drop in employee count.
“[JPMorgan] is only richly valued relative to history, and that history did not include the most transformational technology of our lifetimes. Banks will break to a new valuation paradigm…
By the end of next year, [JPMorgan] will be a trillion-dollar market-cap company.”
As of Monday’s close, JPMorgan’s market cap stands at $811 billion.
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