J.P. Morgan: AI Bubble Not About to Burst

Investments in AI are “justified and sustainable” amid massive capital expenditure, according to J.P.Morgan’s Outlook 2026. The company says it continues to look for opportunities across the AI value chain.

It adds that although the ingredients for an AI bubble were “certainly in place”, it was not about to burst and AI would transform industries and investment opportunities.

“As we look ahead, investors are facing a pivotal shift. Three powerful forces are shaping a new market landscape: artificial intelligence, fragmentation and inflation,” says Kristin Lemkau, CEO, J.P. Morgan Wealth Management. “In our 2026 Outlook, we highlight how AI is set to transform industries and investment opportunities, but it also brings the risk of overenthusiasm.”

AI ‘tailwind for economy’

J.P.Morgan says it believes that large US tech companies would triple their annual capital investment from 2023 to over US$500bn in 2026 and that in general it sees AI investment could double from its current level of 1% of GDP. It describes AI capex as a tailwind in the global economy.    

But it outlines a number of challenges to AI expansion. J.P. Morgan argues that the most pressing limit to the AI expansion is power: ageing infrastructure and a shortage of renewable energy could act as a barrier to growth in AI.  

It also argues that the evolving and complex area of data privacy would remain a “persistent challenge”. 

Regulators will likely take notice, it says, as AI models improve and start to appear in the physical world through, for example, autonomous vehicles and robotics. Debates about resource scarcity, privacy and safety will likely shape public sentiment and policy around AI in ways that can create and destroy financial value, it says.

“In our view, physical, social and political constraints on the AI expansion should act as a moderating influence, helping to restrain excess investor euphoria and giving labor markets more time to adjust to potential disruption,” it says. 

Chief financial officers becoming more optimistic about AI

Research by Deloitte among UK-based chief financial officers shares J.P. Morgan’s optimism for AI, finding that these CFOs are becoming more optimistic about the future of AI.

59% of finance chiefs have become more optimistic over the past 12 months on the potential for AI to boost the performance of their organisation, up from 39% in Q3 of 2024, the company says. 96% expect to see a rise in investment in digital technology and assets by UK companies in the next five years.

Richard Houston, Senior Partner and Chief Executive of Deloitte UK says, “CFOs are significantly more positive about improving performance through deploying AI and remain upbeat about technology investment over the medium term. We know technology was a big driver of US GDP in 2025 and we see real potential in the year ahead for AI to boost UK business performance and fuel growth.” 

Deloitte argues that AI is producing leaders and laggards by nation, and while it did not name the laggards, it says some countries were focused on not falling further behind. It says that AI is fuelling much of the growth in the economy of the United States and investment in AI was accelerating in Australia, among other countries.

In the financial services sector, the pace at which companies are exploring AI-based business models remains frantic, with a range of targeted outcomes, such as cutting operational costs, exploiting new markets or improving customer experience.