JPMorgan is flagging a market pattern that looks eerily like the late 1990s — and it's centered on artificial intelligence stocks. The bank warns that a growing gap between AI chip stocks and the hyperscalers buying those chips could spell trouble in the coming weeks.
The numbers behind the gap
AI chip stocks have surged 87% year-to-date. That's a massive run. Meanwhile, the hyperscalers — think Microsoft and Meta — are lagging behind. Those companies are pouring billions into AI infrastructure, but their stock performance hasn't kept pace with the chip makers. JPMorgan says this kind of divergence is reminiscent of the late-1990s tech boom, when infrastructure companies soared while the companies actually using that infrastructure struggled to show returns.
What JPMorgan is watching
The bank says the next few weeks are critical. If hyperscalers can't deliver earnings or guidance that justify their AI spending, the divergence could become a problem. Investors might start questioning the whole AI narrative. JPMorgan isn't calling a crash, but it's clearly on alert. The warning comes as the market digests a year of AI hype and tries to figure out which companies will actually profit from the technology.
The late-1990s comparison is worth noting because that era ended with a brutal tech bust. Back then, companies spent heavily on internet infrastructure — fiber optics, servers, networking gear — but many of the end-user businesses never materialized. Today, the hyperscalers are spending billions on AI chips and data centers. If their AI revenue doesn't catch up soon, the market could reprice those stocks fast. JPMorgan's note suggests the next few weeks of earnings reports and forward guidance will be decisive.
For now, the AI trade remains hot, but the divergence is a red flag that investors can't ignore. The bank is telling clients to watch closely — the next few weeks could set the tone for the rest of the year.
