# J.P. Morgan Asset Management

> Committed to partnering with advisors to build stronger portfolios

## Recent Posts

- [SMA – Save More Alpha – in a Separately Managed Account](https://paragraph.com/@jpmorganam/sma-save-more-alpha-in-a-separately-managed-account)
- [Views from our Global Equity Investors Quarterly, October 2025](https://paragraph.com/@jpmorganam/views-from-our-global-equity-investors-quarterly-october-2025)
- [The renaissance in emerging markets looks set to continue](https://paragraph.com/@jpmorganam/the-renaissance-in-emerging-markets-looks-set-to-continue): While the Magnificent 7 have once again dominated market headlines this year, there have in fact been substantial gains elsewhere in the world. Emerging markets are enjoying a strong recovery, up more than 30%, and for the first time in ages we are seeing growing signs of client interest in this space. We think that's justified. Earnings growth looks solid. Technology—the sector makes up 25% of the earnings base for emerging markets overall—is a big driver as the AI boom spills over into areas such as memory chips and the big Chinese internet names.

We find other drivers of growth as well. Improving capital discipline is a growing theme across Asian markets. If U.S. dollar weakening has only just begun, then history suggests this nascent positive trend in emerging markets has plenty of room to run (Exhibit 3). In this context we note that the MSCI emerging market index is only just back to levels first reached in 2007, before the GFC. After many years of dull returns many clients are under allocated to emerging markets and we see plenty of potential for that to change. Neglected laggards, high quality growth stocks and many Latin American financials all offer good alternatives to balance the technology winners in our portfolios.
- [The path to stronger portfolios](https://paragraph.com/@jpmorganam/the-path-to-stronger-portfolios): In brief
Profits remain healthy and seem to be accelerating, with tariff impacts mostly subdued. The AI investment boom remains the key source of strength.
Equity market returns have been accompanied by a rising appetite for riskier stocks, and our research work now finds the best opportunities in value sectors such as energy, health care and financials.
Many of our investors have become somewhat more cautious about the market outlook after recent gains. We suggest diversifying from recent winners and focusing strongly on quality stocks, especially in the small cap space.
Taking stock
Since our previous Investors Quarterly in June, the mood in world equity markets has turned increasingly bullish and the tariff-inspired panic of April is now a distant memory. Robust corporate profits and ever-increasing and broadening enthusiasm for the AI investment boom have been the key drivers of returns. Risk taking has been generously rewarded.

Our portfolio team's view has become more cautious after these moves; only 9% of our investors are expecting above average gains in their markets from this starting point, down from 28% three months ago. We are optimists on profits but think valuations are becoming rather elevated— no immediate cause for concern but something to watch. In some corners of the market speculative activity is at already dangerous levels (for example in small caps, as we discuss below)In brief
Profits remain healthy and seem to be accelerating, with tariff impacts mostly subdued. The AI investment boom remains the key source of strength.
Equity market returns have been accompanied by a rising appetite for riskier stocks, and our research work now finds the best opportunities in value sectors such as energy, health care and financials.
Many of our investors have become somewhat more cautious about the market outlook after recent gains. We suggest diversifying from recent winners and focusing strongly on quality stocks, especially in the small cap space.
Taking stock
Since our previous Investors Quarterly in June, the mood in world equity markets has turned increasingly bullish and the tariff-inspired panic of April is now a distant memory. Robust corporate profits and ever-increasing and broadening enthusiasm for the AI investment boom have been the key drivers of returns. Risk taking has been generously rewarded.

Our portfolio team's view has become more cautious after these moves; only 9% of our investors are expecting above average gains in their markets from this starting point, down from 28% three months ago. We are optimists on profits but think valuations are becoming rather elevated— no immediate cause for concern but something to watch. In some corners of the market speculative activity is at already dangerous levels (for example in small caps, as we discuss below).

Earnings growth is accelerating again, and 2026 looks solid
Earnings expectations have been trending higher since May, with the technology sector leading strongly and forecasts slipping in Europe. We stick with our view that 2026 will be both a good year for U.S. profits and a year of broader growth. The 493 non-“Magnificent 7” companies in the S&P 500 are forecasted to grow profits by 12% after three years of very little progress. Meanwhile the growth of the Magnificent 7 continues at a healthy clip, and this group has been the source of most of the recent upgrades to near-term forecasts.

Outside the U.S. we see profits in the emerging markets growing 14% this year. Europe is a soft spot but the 2026 outlook looks better there as well. Solid economic growth, the fading of post-pandemic hangover effects, manageable tariff impacts, accommodative Federal Reserve policy, strong financial markets and of course the giant AI investment boom—all support an optimistic view on profits for most parts of the corporate sector.

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