JPMorgan Sounds Alarm on AI Stocks as Downturn Looms

Despite major indexes remaining in a bullish trend, JPMorgan Chase & Co.'s technical strategist Jason Hunter believes that a downturn is ahead. Hunter argues that surface-level index strength is masking a shift in market internals and leadership that typically precedes trouble.

The trigger for this potential downturn, according to Hunter, is not economic data but the slow unraveling of conviction in artificial intelligence stocks, which have powered much of this year's gains.

Late summer and early fall are historically the market's weakest stretch, and JPMorgan sees this backdrop compounding that seasonal risk rather than offsetting it. The gap between calm index-level performance and deteriorating conditions underneath is a setup that investors tend to miss until it's too late.