1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Investors In Q3 2024: 105
JPMorgan Chase & Co. (NYSE:JPM) is the largest private bank in the world in terms of total assets. The bank’s total assets sit at a whopping $4.1 trillion, and they are in themselves an unbeatable moat in the industry. JPMorgan Chase & Co. (NYSE:JPM)’s heft is complemented by a well-diversified income statement that relies on lending, capital markets, and other sectors to generate revenue. During the first nine months of the year, the bank earned 48% of its revenue through noninterest income. Within this line item, 30% of JPMorgan Chase & Co. (NYSE:JPM)’s revenue came from asset management and investment banking. These sectors respond favorably to lower interest rates, and consequently, they set the bank up well for a low-rate era. The tailwinds from investment banking were also evident following JPMorgan Chase & Co. (NYSE:JPM)’s third-quarter earnings which saw the shares rise 5% after investment banking fees jumped by 31%.
Another surprise during the quarterly report was an upward revision to annual net interest income guidance to $92.5 billion. Here’s what JPMorgan Chase & Co. (NYSE:JPM) management shared on this front during the Q3 2024 investor call:
“So we see the current 2025 consensus for NII ex-markets to be currently at 87%, which is obviously lower than it was at the conference earlier in the quarter. So we’re happy to see that move a little bit more in line to us. That still looks a little toppy, but it’s definitely in the ballpark. Now, that consists of, I already mentioned previously, that we sort of expect the NII trough sometime in the middle of the year. So you can kind of assemble the parts. You’ve got a fourth quarter run rate. You’ve got some sequential declines.
You’ve got a trough in the middle of the year, and you’ve got a rough ballpark for the full-year. So you can imagine that the trough probably is a little lower than those numbers and then to the extent that growth revolves, resumed in the back half of the year, both deposit balances and the ongoing tailwind of card revolve over that tailwind will be a little bit less than you might have otherwise thought I mean sorry a little bit less than it was this year, but still a tailwind. You know obviously the mix of those things will play out in different ways and as you point out who knows what the yield curve will wind up doing. But on our current assumptions, on the current yield curve, and remembering that we’re in the third quarter now, so we’re doing this kind of early, that’s what we think.”
JPM is a bank stock for the long term that hedge funds are diving head first into. While we acknowledge the potential of JPM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JPM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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