AI Stocks Mirror a 1990s Market Split: JPMorgan Issues Critical Warning

AI giants and chip makers are diverging in price action, echoing the late 1990s tech boom split.

Divergence Between Chipmakers and Hyper‑Scalerers

■AI firms surged from $4,500 to $7,200, while chipmakers hovered between $150 and $200.

■Titans like NVIDIA, AMD and TSMC boast market caps above $200 bn, yet growth rates have slumped to around 15 %, reminiscent of the mid‑1990s.

■Hyper‑Scalerers (Google, Amazon, Microsoft) have reached $300 bn in market value, but volatility spiked to 30 %.

Reflections from the 1990s

■Between 1995‑1999, internet firms grew 10‑20× while infrastructure firms stagnated.

■Today, AI companies display a similar “high growth, high risk” dynamic, whereas chip firms face slow growth.

■JPMorgan notes this as a “split market,” urging investors to adopt dual strategies.

JPMorgan’s Critical Assessment

■JPMorgan Global Markets chief stated: “The next few weeks are critical; investors must reassess risk.”

■Analysts point to a $10 bn surge in trading volume, indicating a shift toward AI and infrastructure stocks.

■The market is split, with $5 bn in large sell‑offs and $2 bn in buying.

Strategic Tips for Investors

■In long‑term portfolios, focus on low‑debt, high‑management‑quality chip firms.

■For growth‑seekers, AI stocks remain attractive, but risk and scalability must be considered.

■Diversification can also include mid‑cap chip firms around $3 bn.

Market Signals and Expectations

■The AI‑heavy subset of the S&P 500 grows +12 %, while the infrastructure subset declines -4 %.

■Investors should watch companies with a +5 % price‑to‑book ratio closely.

■JPMorgan forecasts that the split will crystallize over the next two months, potentially increasing short‑term volatility.

Markets are mirroring the late 1990s tech boom split, signaling to investors that value‑oriented chip firms, with low leverage and strong governance, remain resilient in crises, while high‑growth AI firms continue to attract those with higher risk tolerance.