We recently compiled a list of the 7 Best Bank Stocks To Buy in 2024. In this article, we are going to take a look at where JPMorgan Chase & Co. (NYSE:JPM) stands against the other bank stocks.
The largest dip since August occurred in U.S. stocks on September 4, 2024, when the market fell 1.6%. The decline was mostly caused by drops in the technology and energy markets amid economic uncertainty. The market remained volatile, and worries about jobs and economic data mounted, as the August BLS report shows the US created fewer than anticipated jobs in August 2024. Nonfarm jobs grew at 142,000 but remained below the Dow Jones forecast of 161,000. However, the unemployment rate went down from 4.3% in July to 4.2% in August.
Treasury yields dropped to 3.85% as investor attention turned to impending payroll data that may have an impact on the Fed’s interest rate decisions. Despite a historically challenging September, some analysts see possible drops as buying opportunities, citing investors’ controlled inflation and high cash reserves.
Despite the financial volatility, the financial services industry’s long-term outlook is still favorable. As we discussed in our article “25 Biggest Financial Firms in the World,” the financial services industry is projected to grow at a 7.7% CAGR from $31138.82 billion in 2023 to $33539.52 billion in 2024.
According to IBM’s report, financial services are being revolutionized by generative AI, which increases productivity and automates tasks. AI speeds up fraud detection by 50% and decreases transaction processing times by 30%, as per IBM’s survey. While 75% of financial workers expect AI to automate 25% of their duties, it aids in the analysis of market trends in investment management. AI-driven chatbots reduce human labor by 80% and increase query processing accuracy by 85% in customer support. Furthermore, generative AI improves data management in CRM systems by automatically summarizing calls and extracting insights, boosting CRM update efficiency by 30% and saving companies millions of dollars in operating expenses while strengthening client relationships.
Specifically, the global retail banking market was valued at $2.08 trillion in 2023 and $2.21 trillion this year, according to the Precedence Research. The market is projected to grow at a CAGR of 6% to reach approximately $3.97 trillion by 2034, per the research. In 2023, Asia Pacific held the highest share of 34.14% in the market. It is anticipated that North America is predicted to be the second-largest region for the retail banking market during the projection period.
Looking ahead, the 2024 U.S. Banking Industry Outlook Survey by KPMG outlines the major obstacles and prospects that banks face in the face of technological, regulatory, and financial disruptions. Of the 200 banking CEOs surveyed, 65% claimed that generative artificial intelligence is an integral part of their institution’s long-term vision and strategy, and 60% said that their companies have GenAI-enabled cybersecurity in both pilot and production stages. Despite challenges including interest rate risks and geopolitical unpredictability, two-thirds of executives are still confident in their bank’s growth prospects, with 59% predicting inorganic profitability growth. Regulatory intensity dominates focus, with 80% thinking regulatory supervision and enforcement in the area of cyber risk will increase, while 55% of institutions have boosted their resources to manage cyber threats. Moreover, following the Fedwire and SWIFT deadlines in November 2025 and March 2025, respectively, ISO 20022 compliance is a top priority for U.S. banks.
Methodology:
We sifted through holdings of bank ETFs and financial media covering bank stocks to form an initial list of 20 bank stocks. Then we selected the 7 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
A group of business people discussing plans around a boardroom table adorned with a financial services company logo.
JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Investors: 111
Having the top investment bank, commercial bank, credit card, retail bank, and asset and wealth management franchises, JPMorgan Chase & Co. (NYSE:JPM) is undoubtedly the “Biggest Financial Firms in the world,” with a market cap of $619.19 billion and one of the most powerful banks in the US. The bank appears to have a clear route to competitive advantage because of its market size, diversity, and effective risk management, but few other companies have been able to implement a comparable plan. Even the most skillfully run banks occasionally make mistakes, but the firm seems to have assembled all the parts in a less disorganized and more logical manner than its competitors.
It is divided into four main sections: asset and wealth management, corporate and investment banking, commercial banking, and consumer and community banking. JPMorgan is regulated in multiple countries where it conducts business.
Recently, JPMorgan Chase & Co. (NYSE:JPM) Payments extended its partnership with PopID to facilitate in-store biometric transactions throughout the US. Faster transactions are possible with this pay-by-face option because credit cards and phones are not required.
The financial company is attracting the interest of analysts. Piper Sandler maintained its $230 price target and Overweight rating on JPMorgan, pointing out the bank’s capacity to outperform rivals despite market difficulties. Expecting no significant changes in its outlook, the firm applauded JPMorgan for its effective risk profile, leading profitability, and conservative guidance.
Deutsche Bank, on the other hand, downgraded JPMorgan from Buy to Hold, maintaining a target price of $235. The company highlights JPM’s year-to-date performance and praises strong credit quality and higher-than-expected net interest income, but it sees little room for further upside. A Federal Reserve rate decrease in September is anticipated by major banks, including JPMorgan, in response to growing unemployment. This is also the reason for the downgrade.
Carillon Eagle Growth & Income Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM) in its first quarter 2024 investor letter:
“JPMorgan Chase & Co. (NYSE:JPM) contributed positively to performance following solid financial results and positive guidance for the remainder of 2024. Moreover, growing chatter around rising capital markets activity likely contributed to the stock’s strong performance relative to other banks. Recall that JPMorgan has a robust capital markets franchise.”
Ken Fisher’s Fisher Asset Management is the largest shareholder in the company, with 12,740,431 shares worth $2.58 billion.
Overall JPM ranks 1st on our list of the best bank stocks to buy. While we acknowledge the potential of JPM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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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Disclosure: None. This article is originally published at Insider Monkey.