J.P. Morgan Global Research has reaffirmed a constructive stance on global equities for the remainder of 2026, projecting double-digit percentage gains across both developed markets (DM) and emerging markets (EM). This bullish outlook comes at a pivotal moment: the recent US-Iran ceasefire has eased geopolitical tensions, oil prices have retreated, and the artificial intelligence (AI) investment supercycle continues to drive corporate capital expenditure and earnings expansion.
As of mid-April 2026, the S&P 500 hovers near 6,800–6,820 levels following a volatile start to the year. J.P. Morgan’s strategists, including Dubravko Lakos-Bujas (Head of Global Markets Strategy) and Mislav Matejka, see equities offering 10–25% upside potential in 2026, outperforming cash and bonds in a environment of robust earnings growth, supportive monetary policy, and declining policy headwinds.
The Foundation of J.P. Morgan’s Bullish Thesis
J.P. Morgan’s optimism rests on four interconnected pillars:
- Robust Earnings Growth Driven by AI The bank highlights the AI supercycle as a multi-year force fueling above-trend earnings expansion. Global corporate capex, particularly in technology, utilities, data centers, and related infrastructure, remains elevated. J.P. Morgan estimates that AI-related spending could sustain earnings growth of 13–15% for the S&P 500 over the next two years. This momentum is broadening beyond mega-cap tech into a wider set of industries and geographies.
- Lower Rates and Supportive Policy Environment The Federal Reserve’s rate-cutting cycle, combined with front-loaded fiscal support in several major economies, is expected to provide a tailwind for risk assets. Even with sticky inflation concerns, J.P. Morgan anticipates a resilient global growth backdrop that avoids a deep recession (assigning roughly 35% probability to a U.S./global recession in their base case). Lower short-term rates should boost equities and credit while keeping long-term bond yields relatively range-bound.
- Broadening Global Participation Unlike previous years dominated by U.S. exceptionalism, J.P. Morgan sees a more balanced recovery. Emerging markets, particularly in Asia (China, India, Korea), are poised for strong rebounds thanks to improving fundamentals, policy easing, and rising AI-related exports. Developed markets outside the U.S.—including Europe and Japan—stand to benefit from easing energy pressures post-ceasefire and fiscal initiatives (e.g., German spending programs).
- Multidimensional Polarization Creating Opportunities The strategists describe 2026 as a year of “multidimensional polarization”: AI winners versus laggards, strong capex versus softening labor markets, and divergent household spending patterns. This environment rewards active stock selection and geographic diversification rather than passive beta exposure.
Regional Outlook: Where the Gains Are Expected
- United States: Despite rich valuations, the S&P 500 remains a core holding. J.P. Morgan sees healthy earnings driven by AI adoption and resilient consumers. Earlier 2026 targets around 7,200–7,500 imply solid mid-to-high single-digit to low double-digit returns from current levels, though recent adjustments reflect geopolitical oil risks. Tech, semiconductors, and AI-enabling sectors (Nvidia, Broadcom, Micron) continue to lead.
- Europe: After a period of underperformance, European equities could see a rebound. Earnings revisions are turning positive, supported by a weaker euro (or at least stabilization), fiscal stimulus, and reduced energy cost pressures. Banks, defense, and industrials may benefit from higher defense spending and reshoring trends.
- Japan: Corporate governance reforms, shareholder-friendly policies, and capital efficiency improvements underpin another year of solid gains. Japanese equities have already shown resilience in early 2026.
- Emerging Markets & Asia: This is where J.P. Morgan sees some of the most attractive relative upside. China’s tech sector and broader EM equities could deliver outsized returns if deflationary pressures ease and stimulus takes hold. India remains a structural growth story. Overall, EM earnings growth is expected to match or exceed developed markets in 2026.
Key Risks That Could Derail the Bull Case
J.P. Morgan is bullish but not blind to downside risks:
- Geopolitical and Oil Shocks: The fragile US-Iran ceasefire has already triggered a relief rally, but any resumption of hostilities or disruptions in the Strait of Hormuz could spike energy prices and reignite inflation. Earlier in March 2026, the bank trimmed its S&P 500 year-end target partly due to these concerns.
- Sticky Inflation and Policy Missteps: Services inflation remains benign, but goods prices could face upward pressure from tariffs or supply-chain fragmentation. Central banks may pause easing if labor markets tighten unexpectedly.
- AI Hype vs. Reality: While the supercycle is real, overenthusiasm could lead to valuation compression in crowded trades. Earnings delivery will be critical.
- Labor Market Weakness: Softening job openings and wage growth could weigh on consumer spending later in the year.
Despite these risks, J.P. Morgan maintains that equities should outperform other major asset classes in 2026.
Investment Implications: How to Position Portfolios
For investors aligning with J.P. Morgan’s view, several themes stand out:
- Embrace AI Broadly: Beyond pure-play chipmakers, look at AI beneficiaries in software (Palantir), infrastructure (data centers, power utilities), and application layers. Semiconductor packaging and high-bandwidth memory stocks also remain attractive.
- Diversify Geographically: Reduce over-reliance on U.S. mega-caps. Allocate to international and emerging market equities for both return enhancement and risk mitigation. Vehicles like the Vanguard Total International Stock ETF can provide broad exposure.
- Favor Quality and Selectivity: In a polarized market, focus on companies with strong balance sheets, visible earnings acceleration, and competitive moats. Insider buying in names like Upstart or AST SpaceMobile can serve as additional conviction signals.
- Consider Alternatives: J.P. Morgan’s broader outlooks highlight opportunities in private equity, infrastructure, and real assets as complements to public equities, especially in an era of economic nationalism and AI-driven productivity gains.
- Maintain Defensive Hedges: Bonds (particularly investment-grade credit and munis) and gold can still play a role in multi-asset portfolios, especially if volatility spikes.
Broader Context: A Year of Promise and Pressure
J.P. Morgan’s 2026 outlook aligns with its “Promise and Pressure” theme: the promise of AI-driven productivity and global growth rebound versus the pressure of fragmentation, higher-for-longer inflation elements, and geopolitical uncertainty.
The recent ceasefire has provided an immediate positive catalyst, lowering energy costs and boosting consumer sentiment. Combined with ongoing Fed easing prospects and the AI tailwind, the setup favors risk assets. However, the bank emphasizes discipline—valuations are elevated in many regions, so returns in 2026 are more likely to come from earnings growth than multiple expansion.
Final Thoughts
J.P. Morgan’s call for double-digit gains in global equities reflects confidence in the underlying fundamentals: a resilient economy, transformative technology spending, and policy support. While not without risks—particularly from geopolitics and inflation—the path higher appears more probable than a major reversal.
Investors should use the current relief rally as an opportunity to rebalance toward diversified global exposure, overweight AI-enabled sectors, and maintain flexibility. As Lakos-Bujas and the team note, 2026 will reward those who navigate polarization successfully rather than chase yesterday’s winners blindly.
For long-term portfolios, the message is clear: stay invested in equities, diversify intelligently, and focus on companies that can deliver real earnings growth in the AI era. Double-digit returns may not come easily every quarter, but J.P. Morgan believes the ingredients for a solid 2026 are firmly in place.