JPMorgan: Buy the AI Dip
JPMorgan says any dip in AI stocks following a Democratic sweep in the midterms would be a buying opportunity.
The bank expects AI spending to remain strong through 2028 no matter who wins, arguing that the data center and chip buildout is driven by corporate capital budgets and competitive pressure rather than by which party controls Washington.
With Democrats having now swept both chambers, that call is being put to the test in real time as traders decide whether the result changes anything for the AI trade.
The Gridlock Case
JPMorgan also points to divided government as historically the best setup for equities. The bank notes the S&P 500 has averaged a 21% gain over two-year terms of gridlock since 1950, versus 18% under one-party control.
The logic is that gridlock limits how much fiscal or regulatory policy can change in either direction, removing a layer of uncertainty that markets tend to dislike.
Options and Market Impact
The AI complex is where this thesis will show up first. Flow in Nvidia, the central name in the AI buildout, and in Microsoft will tell traders whether election-driven selling is being absorbed or extended.
Hyperscaler spending plans are the fundamental anchor of the trade, so options activity in names like Amazon and Meta is also worth watching for signs that institutions are using weakness to add exposure.
At the index level, SPY call flow after the result will show whether the historical gridlock pattern is driving real positioning or just commentary.
Bottom Line
JPMorgan's view is that the AI spending cycle runs through 2028 regardless of election outcomes, and that any sweep-driven dip in AI names is an opportunity rather than a warning. The first sessions after the result will show whether the market agrees.
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