Investing in a time of uncertainty. "We focus primarily on the U.S. technology sector," the expert says
The S&P 500 index level, according to the forecast by JPMorgan Chase & Corporation, is expected to end the current year at 7600 points.
Last month, experts expected the S&P 500 to reach a lower peak of about 7200 points.
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The team cited better prospects for the technology sector and artificial intelligence as the reason for the shift in outlook, which will likely contribute to corporate earnings growth.
These factors also aim to offset ongoing concerns about geopolitical risk, including tensions between the United States and Iran.
According to Bloomberg, the revised forecast highlights a broader trend: the difficulty of forecasting the course of future events, which market participants face in the second Trump administration.
It mainly concerns volatility and periods of uncertainty that arise both from the threat of tariffs, worsening U.S. relations with other countries, and the risk of new conflicts.
Financial results of companies for the first quarter may prove helpful during this period, as investors showed greater optimism about AI-based solutions and high capital expenditures for its development compared to the fourth quarter of last year.
Patryk Pyka discussed investment strategies for Q2 in an interview with FXMAG.
"From the beginning of Q2 we focus primarily on the U.S. technology sector", he said.
Although we have seen a dynamic rebound in this segment in recent weeks, we believe that it is not yet over. After an episode of irrational skepticism that persisted in previous months around AI, the market has concluded that it overreacted.
At the end of Q1, companies in the Magnificent 7 were valued with a premium to the rest of the S&P 500 index of 30% (the lowest since 2017). Such a low premium suggested that investors had stopped believing in the monetization of massive AI investments that the largest U.S. tech companies recently made.
"We believe that positive cash flow resulting from these expenditures will appear in 2–3 quarters. In other words, contrary to widespread market rhetoric, we believe that massive spending on data center construction is not a form of throwing money into the mud", the expert stated.
Patryk Pyka also answered a question about the "AI bubble" that has recently dominated media headlines about the market.
"The mere concerns have already harmed the valuations of tech companies. The entire rhetoric of a "bubble", which intensified at the turn of 2026 and 2027, led to the fact that by the end of Q1 the U.S. tech sector was the most overvalued segment of the U.S. equity market, for which the price-to-earnings ratio was about 20% below the 5‑year average", he noted.
In our view there is no bubble when everyone talks about it, when everyone talks about it.
Furthermore, remember that AI spending does not worsen company results – in Q1 the aggregated EPS growth in the tech sector exceeded 40% YoY. The main actors of the AI revolution are companies with established business models that are exceptionally profitable.
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Is the S&P 500 a safe choice? "If it's about the equity market, full agreement"
The S&P 500 has recently hit new historic highs.
The lack of agreement between the United States and Iran strengthens the bull market driven by the so‑called risk appetite.
The JPMorgan Chase & Corporation team forecasts that geopolitical tensions could lead to a discount in the equity market, while excluding the probability of another escalation of conflict in the Middle East.
Nonetheless, they suggest that the expected peace between Washington and Tehran would raise the S&P 500 to 8000 points.
Patryk Pyka assessed whether investments based on the mentioned index are the safest from the perspective of novice investors.
If it's about the equity market, full agreement. It is hard to find an alternative market or index where we would have such high and repeatable growth dynamics of earnings and revenues.
The U.S. equity market has its weak moments, but capital flows there at the end of the day, where the most profitable companies are located.
"It is also worth remembering that a major support for the U.S. equity market is the fact that it occupies the largest share in global portfolios. Therefore, every form of increased risk appetite in the medium and long term will reward Wall Street and S&P 500 companies," the expert summarized.
The S&P 500 closed on Wednesday, April 22, up 1,05% to 7137 points.
Source: Bloomberg.
The above material is informational and does not constitute an investment recommendation. Investing carries risk, and every investment decision should be made independently, taking into account individual financial circumstances and investor goals.
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Source: Bloomberg.
