AI out, JPMorgan says overlooked stock areas have major potential.

Undervalued Stock-Market Sectors to Invest in As AI Trade Slows


  • There are three underbought sectors in the stock market that have unrealized upside potential according to JPMorgan Asset Management.
  • These sectors include semiconductors, rail and parcel, and home improvement, and could offer great portfolio additions as earnings growth in AI stocks slows down.


Investors are still focused on generative AI stocks, but JPMorgan Asset Management identifies three overlooked sectors in the stock market that have the potential for significant gains. While tech giants like Nvidia, Meta, and Microsoft have seen substantial growth, JPMorgan expects the rest of the S&P 500 to catch up in terms of earnings expansion by the fourth quarter of 2024. The firm highlights the semiconductor, rail and parcel, and home improvement sectors as areas with untapped potential. Semiconductors outside of the AI trade, rail and parcel due to the resiliency of the US economy, and home improvement driven by the aging US home population are noted as key areas for investment. JPMorgan recommends seeking non-Magnificent Seven stocks with depressed valuations for upside potential as the market rally narrows. This diversification strategy aligns with the uncertainty around the upcoming election and Fed rate cuts, signaling a shift in Wall Street recommendations.