10 Best Diversified Bank Stocks to Buy Now

1. JPMorgan Chase & Co. (NYSE:JPM)

Number of Hedge Fund Holders In Q2 2024: 111

JPMorgan Chase & Co. (NYSE:JPM), is the bank of banks. It yields considerable influence world wide, and dominates the world through its unbelievable total assets of $3.8 trillion. The key for the bank moving forward into the sector’s paradigm shift are its capital allocation costs and its capital markets business. On the former front, while JPMorgan Chase & Co. (NYSE:JPM)’s GSIB status has meant that it’s been in the regulatory spotlight for higher capital allocations, its heft also means that before the new rules that confirmed a 9% capital allocation, Morgan Stanley analysts had expected JPMorgan Chase & Co. (NYSE:JPM) to cover the new allocations in less than three years. This was the lowest among its GSIB peers, and the new percentage, which is significantly lower, could reduce the time even more. However, JPMorgan Chase & Co. (NYSE:JPM) might have to book additional costs through capital allocations if the Fed tweaks risk calculations for GSIB surcharges. The bank’s capital markets business and others such as asset management also position it well to benefit from reduced interest rates and a shifting banking environment. Capital markets adoption boomed during the high rate era among those that did not qualify for standard banking. Furthermore, during H1 2024, JPMorgan Chase & Co. (NYSE:JPM) earned a cumulative $12.7 billion through investment banking and asset management to mark a 23% annual growth as these tailwinds started to materialize.

JPMorgan Chase & Co. (NYSE:JPM)’s management commented on capital markets during the Q2 2024 earnings call:

“Demand for new loans remains muted as middle market and large corporate clients remain somewhat cautious due to the economic environment, and revolver utilization continues to be below pre-pandemic levels.

Also, capital markets are open and are providing an alternative to traditional bank lending for these clients.”

JPM tops our list of the best hedge fund diversified bank stocks. But our conviction lies in the belief that some 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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