JPMorgan Strategist Questions AI Profit Sustainability Amid Tech Selloff

New York, NY – February 6, 2026 – The booming narrative surrounding artificial intelligence (AI) and its profit potential is facing scrutiny from a prominent voice in the financial world. David Kelly, the chief global strategist at JPMorgan Asset Management, has voiced concerns that the current market valuations for AI-driven profits may be artificially inflated, likening the situation to software stocks being "sentenced before trial." This perspective emerges as investors engage in what Kelly describes as a "prudent rebalancing" of their portfolios amid a recent selloff in technology stocks.

Kelly's remarks, made during an appearance on Bloomberg's "Open Interest," highlight a growing sentiment that the extraordinary growth anticipated from AI technologies might be outpacing realistic profit generation. The rapid ascent of AI-focused companies has led to significant investor enthusiasm, often driving up stock prices based on future potential rather than current financial performance. This speculative fervor, according to Kelly, is now being met with a more cautious approach by market participants.

The "sentenced before trial" analogy suggests that the market is already pricing in a level of success for AI that may not materialize, or at least not as rapidly as anticipated. This could leave many software companies, especially those heavily invested in or reliant on AI development, vulnerable to sharp corrections if their actual earnings fall short of elevated expectations. Bloomberg reports indicate that this sentiment is a key factor influencing the recent volatility observed in the tech sector.

The recent selloff in tech stocks, while perhaps a precursor to a broader market adjustment, also signals a potential shift in investor sentiment. For months, the allure of AI-powered innovation has captivated markets, leading to unprecedented gains for many technology firms. However, as the initial hype begins to fade, investors are increasingly looking for tangible evidence of profitability and sustainable business models. This is prompting a reassessment of where capital is best deployed, leading to the "prudent rebalancing" that Kelly has identified.

This rebalancing act involves investors moving capital away from the most speculative growth areas and into more stable or undervalued assets. It's a classic market reaction to perceived overvaluation and a desire to mitigate risk. The question now facing the market is whether the AI revolution will deliver on its immense promise in a way that justifies the current valuations, or if a more significant correction is inevitable.

Kelly's commentary serves as a crucial reminder that while technological advancements like AI hold transformative potential, their financial impact is subject to the same economic realities as any other industry. The journey from groundbreaking innovation to sustained profitability is often complex and fraught with challenges. Investors are now tasked with discerning between genuine, long-term value creation and the fleeting allure of speculative bubbles. The coming months will likely reveal which AI-driven companies are truly built for enduring success and which were perhaps "sentenced before trial" by an overly optimistic market.