JP Morgan's David Kelly Says It's 'A Great Economy For Stocks' Amid AI-Led Bull Market Despite Inflation Risks

David Kelly, chief global strategist at J.P. Morgan Asset Management (JPM), told Bloomberg on Wednesday that the U.S. economy is in a strong phase supporting stocks, especially with the ongoing AI boom and resilient consumer spending. He added that the baseline forecast suggests the economy will strengthen in the middle of the year, supported by income tax refunds and stimulus checks.

Recommendation Change

Kelly did not announce an official rating change but emphasized the importance of staying invested in stocks and higher-risk assets during the second half of 2026, while warning of persistent inflation risks that could impact markets.

Analyst's Rationale

Kelly believes the economy will see a mid-year boost from cash flows related to tax refunds and stimulus checks, supporting consumer spending. Additionally, the AI boom provides extra momentum for markets, although inflation remains a risk to monitor.

Context

Kelly's comments come at a time when U.S. markets are performing strongly, led by AI-related tech stocks. However, some analysts differ on inflation risks, with some believing the Federal Reserve may need to tighten monetary policy.

What to Make of It

J.P. Morgan's advice reflects confidence in continued economic growth but carries an implicit inflation warning. Investors should balance opportunities and risks, focusing on sectors benefiting from AI and consumption.