Skip to main content
logo
  • My Collections
    View saved content and presentation slides
  • Portfolio Analysis
  • Log out
  • Funds
      Contact Us

      Fund Listing

      • Mutual Funds
      • ETFs
      • ETF Range
      • How to Invest

      Capabilities

      • All Funds
      • Alternatives
      • Equities
      • Fixed Income
      • ETF Investing
      • Active research
      • Model Portfolios

      In Focus

      • Investing for Income
      • Investing for Fixed Income
      • Investing for Global and EM Equities
      • Investing for Sustainability
      • Investing for Alternatives
    • Insights
        Contact Us

        Market Insights

        • Market Insights Overview
        • Guide to the Markets

          The J.P. Morgan Guide to the Markets illustrates a comprehensive array of market and economic histories, trends and statistics through clear charts and graphs.

        • Guide to Alternatives

          Objective insights on alternatives industry trends, with charts and data across private equity, private credit, real estate, infrastructure and hedge funds.

        • Guide to Investing in Asia

          The Guide to Investing in Asia explores the diverse economies, markets and investment trends across Asia, including Japan, India, China and Southeast Asia.

        • Weekly Market Recap

          Finding balance in Chinese equities: export sectors could gain from progress on trade, while domestic-facing companies cushion against global trade volatility.

        • On the Minds of Investors

          What investment questions are on the minds of investors? Explore the questions investors ask frequently and find answers at J.P. Morgan Asset Management.

        • Podcasts

          Insights from Tai Hui, Chief Market Strategist, Asia, on what is happening in financial markets, from our Asia Pacific headquarters in Hong Kong.

        • Mid-Year Outlook 2026

          Global uncertainties abound: the Middle East conflict, central banks' response to returning inflation, U.S. policy shifts and the fast-changing AI landscape.

        • Solving for Fixed Income

          Exploring how the current environment has affected fixed income's traditional role and the many other opportunities that can accomplish its traditional objectives.

        • Eye on the Market

          Explore Eye on the Market, timely commentary that offers views on the economy, markets, and investment portfolios by Michael Cembalest.

        Portfolio Insights

        • Portfolio Insights Overview
        • Guide to ETFs

          Explore J.P. Morgan Asset Management’s ETF investing guide with insights on ETF market trends and best investing practices for smarter portfolio decisions.

        • Global Asset Allocation Views

          Amid resilient growth and a fading energy shock, we stay positive on risk assets, favoring U.S., Japan and EM equities and U.S. high yield.

        • Global Equity Views

          The profit outlook is cloudier, but we still expect modest growth. Many of our investors favor quality financials and industrials, avoiding high-priced defensives.

        • Fixed Income

          We highlight themes and implications from various fixed income teams to help guide your portfolio decisions.

        • Global Fixed Income Views

          Central bank credibility, solid profits, capex and resilient consumers lift expansion odds to 85%, outweighing inflation and AI headwinds.

        • Sustainable Investing

          Sustainable Insights

        • Alternatives Insights

          We bring you insights based on our nearly 50 years of experience investing in alternatives and more than 800 alternatives professionals around the globe.

        • Long-Term Capital Market Assumptions

          Our Long-Term Capital Market Assumptions (LTCMAs) deliver forward-looking return, volatility and correlation estimates for 200+ asset and strategy classes in 20+ base currencies.

      • Investment Ideas
          Contact Us
          • Latest ideas
          • Alternatives Outlook
          • Sustainable investing
          • ETF Knowledge
        • Resources
            Contact Us
            • All Resources
            • Multimedia
            • Insights App
            • Digital Portfolio Insights
            • Announcements
          • About Us
              Contact Us
              • Overview
              • Awards
              • Diversity, Opportunity and Inclusion
              • Spectrum: Our Investment Platform
              • Our Leadership Team
              • Our Commitment to Research
            • Contact Us
              • My Collections
                View saved content and presentation slides
              • Portfolio Analysis
              • Log out
            • Financial Professional Login
            Log in
            You are about to leave the site Close
            J.P. Morgan Asset Management’s website and/or mobile terms, privacy and security policies don't apply to the site or app you're about to visit. Please review its terms, privacy and security policies to see how they apply to you. J.P. Morgan Asset Management isn’t responsible for (and doesn't provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the J.P. Morgan Asset Management name.
            CONTINUE Go Back
            On the Minds of Investors

            AI Investing: Broadening Opportunity and the Monetization Test

            KC
            Katrina Chiu

            Global Market Strategist

            SA
            Stephanie Aliaga

            Global Market Strategist

            Published: 27/05/2026
            The structural case for AI remains supported by rising compute demand, expanding infrastructure needs, and broader enterprise adoption.

            In Brief

            • AI momentum remains strong, supported by robust earnings, rising compute demand, and massive infrastructure investment.
            • Concentration risk is increasing, especially in the U.S. and Asian markets, making diversification across the broader AI value chain more important.
            • Second-order opportunities may emerge in data centers, power, cooling, equipment, and APAC markets with distinct roles across semiconductors, infrastructure, and AI adopters.

            Investors have favored artificial intelligence (AI)-related names throughout the year, and performance data justifies some of that enthusiasm. Hardware and semiconductors have been standout performers year-to-date. The momentum is real, earnings have been broadly supportive, and the competitive logic pushing capital into the sector remains intact. However, momentum has a way of compressing the margin for error. Benchmark concentration is now elevated across both the U.S. and some Asian markets. That concentration amplifies upside when earnings hold, but it can also accelerate losses when they do not. At this stage of the cycle, a more diversified allocation beyond mega-cap leaders, across the broader AI ecosystem and different regions, may help mitigate the risks of market concentration.

            Demand is real, and monetization is the test

            The AI buildout is happening on a massive scale. Hyperscalers are on track to spend approximately USD 700billion on AI infrastructure this year, directing capital across the physical building blocks of AI: advanced chips, high-bandwidth memory, servers, power systems, and new data centers. For these companies, falling behind in the AI race is viewed as a threat to their very survival. As a result, even the most established technology giants are aggressively ramping up capital expenditure.

            However, the math is becoming less forgiving. In 2025 and 2026, capex is rising much faster than actual revenues, putting pressure on these companies’ available cash flows. At the same time, the stock market is pricing in years of future growth. The durability of the AI boom will therefore depend not only on monetization but also on efficiency. Can these companies grow revenues fast enough through cloud usage, enterprise software, and AI subscriptions to justify the massive investment? If revenues accelerate while costs decline and cash flow improves, the investments will be easier to justify. But if monetization disappoints or efficiency gains fail to materialize, companies may be forced to cut back on capex, creating a painful ripple effect across semiconductor and hardware stocks.

             

            Beyond the obvious names: where the second-order opportunity sits

            The most popular way to invest in AI is by owning the largest hyperscalers and leading semiconductor companies. While valid, this trade is already very crowded. The AI value chain extends well beyond the headline winners in hyperscalers and semiconductors. The next layer of potential beneficiaries may sit in the physical infrastructure required to support AI adoption. This includes data center real estate, engineering and construction firms, nuclear and renewable power providers, transmission networks, gas-powered electricity, cooling systems, and electrical components.

            These areas may benefit from sustained investment as AI drives higher demand for compute, energy, and grid capacity. However, the landscape remains highly competitive, and rapid technology shifts could change which companies capture the most value, making selectivity essential.

            A tour of AI in APAC region

            South Korea and Taiwan are the heavyweights in manufacturing advanced chips and memory. They have seen significant stock market gains recently, but their markets are highly concentrated and have a high correlation with the U.S. technology cycle.

            Japan offers leverage to semiconductor equipment, advanced materials, and robotics, which are critical picks-and-shovels for fabrication and industrial automation. This is supported by a broader reindustrialization dynamic.

            China’s AI trajectory is increasingly independent, driven by self-sufficiency imperatives spanning models through applications in e-commerce, finance, healthcare, robotics, and industrial automation. China’s comparative advantage in more mature semiconductor nodes and its large domestic user base can reduce dependence on the most cutting-edge Western technology. Meanwhile, some Chinese technology companies are benefiting from the tech upcycle as clients redirect orders back to China while global AI demand strains capacity elsewhere.

            Singapore is positioned as a regional hub for data center infrastructure and supply chain orchestration, offering a different angle: the physical and logistical backbone of the Asia-Pacific buildout.

            India’s AI exposure is split between information technology (IT) services companies adopting AI to drive delivery automation and margin improvement, and a growing domestic adoption curve supported by a deep software talent base.

            Investment implications

            The structural case for AI remains supported by rising compute demand, expanding infrastructure needs, and broader enterprise adoption. However, portfolio outcomes may increasingly depend on how investors evaluate exposure across the AI value chain, including platform companies, semiconductors, data centers, power, cooling, equipment suppliers, and sector adopters. This framing can help investors assess where AI-related revenues, productivity gains, and cash-flow improvements may emerge over time, while recognizing that forecasts and market conditions are subject to change.

            Geographically, Asia’s AI exposure may be better understood through distinct market and value-chain roles rather than as a single technology allocation. South Korea and Taiwan are closely tied to advanced semiconductors and memory; Japan is exposed to equipment, materials, and robotics; China’s AI cycle may reflect a more domestically driven ecosystem with distinct opportunities and risks; Singapore is linked to data center and supply chain infrastructure; and India combines IT services with domestic adoption.

            1eea159c-5902-11f1-b8c8-af9c98130b91
            • Artificial Intelligence
            • Economy
            • Equities
            • Markets
            • Technology
            JPMorgan Asset Management

            • Terms & Conditions
            • Financial Services Guide
            • Privacy Policy
            • Cookie Policy
            • Investment Stewardship
            • Voting Policy
            • Unit Pricing Policy
            • Complaint Resolution
            • Sitemap
            J.P. Morgan

            • J.P. Morgan
            • JPMorgan Chase
            • Chase

            Please note:  Following recent amendments to the Corporations Act, where unitholders have provided us with your email address, we will now send notices of meetings, other meeting-related documents and annual financial reports electronically unless the unitholder elects to receive these in physical form and notify us of this election. Unitholders have the right to elect whether to receive some or all of such Communications in electronic or physical form, the right to elect not to receive annual financial reports at all and the right to elect to receive a single specified Communication on an ad hoc basis, in an electronic or physical form.


             

            All investments contain risk and may lose value. This advertisement has been prepared and issued by JPMorgan Asset Management (Australia) Limited (ABN 55 143 832 080) (AFSL No. 376919) being the investment manager of the fund. It is for general information only, without taking into account your objectives, financial situation or needs and does not constitute personal financial advice. Before making any decision, it is important for investors to consider the appropriateness of the information and seek appropriate legal, tax, and other professional advice. For more detailed information relating to the risks of the Fund, the type of customer (target market) it has been designed for and any distribution conditions please refer to the relevant Product Disclosure Statement and Target Market Determination which have been issued by Perpetual Trust Services Limited, ABN 48 000 142 049, AFSL 236648, as the responsible entity of the fund available on https://am.jpmorgan.com/au.