If the AI bubble bursts, NVDA and ASML aren’t the only ones at risk—JPMorgan (JPM) could be in trouble too! Will the bank’s M&A, trading, and interest income take a hit from a broader market downturn?
Do you think JPM is overexposed to AI-driven market sentiment, or is its diversified business a safety net? Share your take on these high-risk stocks below!
The AI wave has swept Wall Street for nearly two years, and names like NVIDIA (NVDA) have become almost synonymous with "unstoppable growth." But beneath the noisy surface, cracks have started to appear. Since last November, major stock indexes have been mostly range-bound, and several well-known AI concept stocks have plummeted after releasing lackluster quarterly earnings. If this signals the start of a broader sell-off—or worse, the final burst of the AI bubble—most stocks will be hard-pressed to survive.
However, three individual stocks appear particularly vulnerable. Two are obvious: NVIDIA and ASML. The third? A banking giant that most investors would never associate with silicon chips: JPMorgan Chase (JPM).
$NVIDIA(NVDA)$ : The Face of the AI Trade
No company has benefited more from AI mania than NVIDIA. Since the start of 2023, NVIDIA’s stock price has soared by over 1,100%, catapulting it to become the world’s largest company by market cap. But it’s precisely this stunning rally that has laid bare its risks.
Since last August, NVIDIA’s stock price has stagnated, suggesting investors are beginning to question whether its AI-driven growth is truly sustainable. The concern is simple: Have companies overinvested in AI hardware with little to show for it in actual returns? If the AI industry hits a rough patch, demand for NVIDIA’s data center processors—now accounting for three-quarters of its total revenue—could evaporate rapidly. A correction fueled by shifting AI sentiment will almost certainly start with NVIDIA.
$ASML Holding NV(ASML)$ : The Indispensable Yet Extremely Expensive "Shovel Seller"
Most investors don’t realize that the world’s most advanced chips today are manufactured using a complex optical technology called extreme ultraviolet (EUV) lithography. ASML monopolizes this niche market, producing multi-hundred-million-dollar machines that chipmakers use to "print" semiconductors. This monopolistic position has made ASML a favorite in the AI trade, with its stock price rising another 35% since the start of this year.
But its success is also ASML’s fatal flaw. Each EUV system sells for approximately $400 million, and ASML’s customers are extremely sensitive to economic signals. Last year, ASML shipped 300 new EUV systems, down from 380 in 2024—a decline that occurred even before the AI industry slowed noticeably, hinting that demand may be weakening. Once a market correction is confirmed, potential buyers may delay or even cancel orders, delivering a severe blow to ASML’s revenue. Trading at nearly 50 times this year’s expected earnings, ASML’s stock price leaves little room for disappointment.
$JPMorgan Chase(JPM)$ : The Unexpected "Outsider"
Now for the most surprising name: a bank, of all things, on a list of stocks highly exposed to AI risks. JPMorgan Chase doesn’t sell chips or build lithography machines. Yet if the AI bubble bursts, the resulting market weakness will inevitably spill over into the broader economy—and that’s where JPMorgan’s risk lies.
First, strategic M&A activity typically cools amid increased economic uncertainty, which will directly impact the bank’s M&A advisory business, currently accounting for about 10% of JPMorgan’s total revenue. Second, if investors sell off stocks, the bank’s equity trading revenue could drop sharply—another source of roughly one-fifth of its revenue. But the biggest threat is net interest income, which makes up nearly half of JPMorgan’s total revenue. Economic downturns are usually accompanied by falling interest rates, which squeeze the profit margins of lending operations while damping new credit demand. A severe recession would hit all three business pillars simultaneously.
Despite these potential risks, the market’s previous pricing of JPMorgan’s stock seemed to ignore them entirely—until recently. After peaking in January, the stock has formed several "lower lows" and "lower highs," a technical pattern often signaling a peak and correction. This may be a subtle sign: doubts about JPMorgan’s short-term prospects are brewing. And large-scale sell-offs often start this way—quietly, and gradually.
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