Jim Cramer surprised his co-hosts on CNBC’s “Squawk On The Street” on Thursday when he predicted that JPMorgan Chase & Co JPM would end up being the biggest beneficiary of the AI boom.
What Happened: Cramer explained Thursday that we are currently in the midst of “one of the greatest markets ever,” being driven by the advancement and implementation of AI technology.
“AI is so front and center, actually happening right now, and my prediction is that the company that will benefit the most from AI is … JPMorgan,” Cramer said.
CNBC’s David Faber guessed that he was going to say NVIDIA Corp NVDA, which Cramer has long been a big supporter of. Cramer suggested that no one stands to benefit from AI more than Nvidia and clarified that he was excluding Nvidia from the prediction and focusing on Nvidia customers.
“Jamie Dimon has probably spent more time with Nvidia than any CEO in the country,” Cramer said, adding that he believed JPMorgan has the most AI opportunity in front of it among Nvidia customers.
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Why It Matters: JPMorgan stock is currently trading at approximately 12.5 times forward earnings, according to data from Benzinga Pro.
Cramer suggested the multiple is way too low: “How could the premier bank in the country, in the world, sell at 12 times earnings? How is that possible?”
The S&P 500 is trading at roughly 24 times earnings, he said, adding that JPMorgan should be trading at a multiple higher than half of what the entire S&P 500 is trading at.
Beyond JPMorgan’s AI positioning, Cramer believed the political landscape could be another catalyst for the stock in the back half of the year. If former President Donald Trump is reelected in November, he suggested it could be another positive for banks.
Investors won’t have to wait long for performance updates. JPMorgan is set to kick off bank earnings season when the company reports financial results for the second quarter before the market opens on Friday. Analysts are looking for earnings of $4.19 per share and revenue of $42.339 billion, according to estimates from Benzinga Pro.
JPM Price Action: JPMorgan shares were up 0.043% at $207.79 at the time of publication Thursday, according to Benzinga Pro.
Photo: Shutterstock
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