J.P. Morgan Asia Thematic Strategy: Why AI Still Matters Most
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Key Views
- Hyperscaler capex ROI remains strong; model-layer ARR should approach nearly $300 billion by end-2026 and could triple to near $1 trillion in 2027.
- Annual cloud capex is expected to reach $1.4 trillion in 2027; if AI ARR doubles yearly, revenue could exceed capex by 2029.
- Power constraints on data centers are being addressed through equipment capacity expansion and behind-the-meter (BTM) power.
- AI capex supports economic activity and employment, though macro consequences warrant monitoring.
Outlook
J.P. Morgan stays constructive on the AI ecosystem, keeping regional overweights in tech, Taiwan, and Korea.
Recommended Securities
All recommended names are rated Overweight: Taiwan tech (TSMC, ASE, MediaTek, Wiwynn, ASPEED, King Slide, Unimicron); Korea (Samsung Electronics, SK Hynix, Samsung Electro-Mechanics); Japan (Tokyo Electron, Advantest, Nitto Boseki); and China/HK tech (ASMPT, NAURA, Pingxin Technology, Zhipu AI) plus China internet (Alibaba).
Key exhibits
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