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Rate Cut Buzz Lifts JPM Stock to New Highs: Is There More Upside Left?
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Key Takeaways
JPM shares hit an all-time high on rate cut optimism despite the Fed's cautious stance.
The bank projects 2025 NII to potentially exceed guidance by $1B amid expansion efforts.
IB outlook weakens near term, but markets revenue and long-term deal pipeline remain strong.
JPMorgan’s (JPM - Free Report) shares touched an all-time high of $289.41 on Thursday as incoming economic data, including jobless claims and the third estimate for gross domestic product (GDP) for the first quarter, indicate interest rate cuts are likely to be sooner than previously expected.
While the Federal Reserve is continuing with its ‘wait and watch’ stance on the rate path due to ambiguity over Trump’s tariff plans, market participants are increasingly gaining confidence in at least two cuts this year. Rate cuts are expected to be counterproductive to JPM’s net interest income (NII) expansion because of its highly asset-sensitive balance sheet.
Nonetheless, at the Investors Day conference on May 19, JPMorgan’s chief financial officer, Jeremy Barnum, noted that the company’s 2025 NII could increase by $1 billion more than previously guided. But he stopped short of making any change to the NII outlook of $94.5 billion (up almost 2% year over year) as it's too early to comprehend the actual impact of various macroeconomic headwinds.
Similar to JPM, its close peers – Bank of America (BAC - Free Report) and Wells Fargo (WFC - Free Report) – anticipate NII to grow this year. Bank of America anticipates NII to jump 6-7% year over year, while Wells Fargo expects the metric to grow 1-3%.
Hence, as the Fed lowers interest rates, demand for loans is likely to improve. This, along with the company’s branch expansion initiative, is expected to drive NII.
With 4,975 branches as of March 31, 2025, more than any other U.S. bank and a presence in all 48 contiguous states, JPM continues to invest in brick-and-mortar to strengthen its competitive edge in relationship banking, despite the digital shift. In May, the company added 14 new Financial Centers in affluent markets. It now has 16 such centers, aiming to double by 2026.
JPMorgan supports its expansion with 14 remote offices offering virtual services for affluent clients, blending digital convenience with in-person expertise. In 2024, it opened nearly 150 branches and plans to add 500 more by 2027 to deepen relationships and boost cross-selling across mortgages, loans, investments and credit cards.
JPMorgan isn’t alone in branch expansion. Bank of America is growing its 3,651-center network, with 40 new openings last year and 110 more by 2027, despite most interactions being digital. Meanwhile, Wells Fargo is trimming branches (down 3% to 4,177 in 2024) while modernizing its network, upgrading 730 locations last year with full revamps planned over five years.
Additionally, JPMorgan has expanded through strategic acquisitions, including a larger stake in Brazil’s C6 Bank, partnerships with Cleareye.ai and Aumni, and the 2023 purchase of First Republic Bank. These moves boosted profits and support its strategy to diversify revenues and grow digital and fee-based offerings.
Resurgence in Capital Markets to Support JPM in the Long Run
JPMorgan’s capital markets business, which includes investment banking or IB and markets, witnessed a robust comeback last year, with IB fees (in the Commercial & Investment Bank or CIB segment) jumping 37% year over year. In 2023, IB fees declined 5%, while plunging 59% in 2022. Likewise, as trading volume and market volatility remained high in 2024, markets revenues benefited and grew 7%.
Despite tariff-related ambiguity and extreme market volatility, the performance of the company’s capital markets business was decent in the first quarter of 2025. However, near-term IB prospects are cloudy due to economic uncertainty, which will likely hurt JPM’s IB business in the second quarter as deal-making activities have largely stalled. IB fees in the CIB segment are expected to be down in the mid-teens range from $2.46 billion in the prior-year quarter.
On the other hand, JPMorgan’s markets revenues are projected to grow in the mid-to-high single-digits range for the second quarter of 2025. This is likely to be driven by a significant rise in market volatility and higher client activity.
Once there is a reduction in the level of uncertainty, JPMorgan is expected to capitalize on it, driven by a solid pipeline and origination of new activity. Also, the company will leverage its leadership position in the IB business (rank #1 for global IB fees in the first quarter of 2025) once the macro situation changes. Hence, the company’s long-term outlook for the IB business remains strong.
JPMorgan’s Fortress Balance Sheet and Solid Liquidity
As of March 31, 2025, JPM had a total debt of $471.9 billion (the majority of this is long-term in nature). The company's cash and due from banks and deposits with banks were $425.9 billion on the same date. The company maintains long-term issuer ratings A-/AA-/A1 ratings from Standard and Poor’s, Fitch Ratings and Moody’s Investors Service, respectively.
Hence, JPM continues to reward shareholders handsomely. In March, the company announced a 12% hike in its quarterly dividend to $1.40 per share. This followed an 8.7% increase in dividends in September 2024. In the last five years, it hiked dividends five times, with an annualized growth rate of 6.77%.
JPM Dividend Trend
Image Source: Zacks Investment Research
Similar to JPM, Bank of America and Wells Fargo have been increasing their dividend payouts regularly. Bank of America raised its dividend four times in the last five years, while Wells Fargo hiked it six times.
JPMorgan also authorized a new share repurchase program of $30 billion, effective July 1, 2024. As of March 31, 2025, almost $11.7 billion in authorization remained available.
JPMorgan’s Asset Quality Weakens
JPMorgan’s asset quality has been deteriorating. While the company recorded negative provisions in 2021, a substantial jump in provisions was recorded in the years after that because of the worsening macroeconomic outlook. The metric surged 169% in 2022, 45.9% in 2023 and 14.9% in 2024. Similarly, net charge-offs (NCOs) grew 117.6% in 2023 and 39.1% in 2024.
As interest rates are less likely to come down substantially in the near term, it is expected to hurt the borrowers’ credit profile. As it remains vigilant about the effects of continuous high rates, the impact of tariffs on inflation and quantitative tightening on its loan portfolio, its asset quality is expected to remain subdued in the near term.
The company expects card NCO rates to be approximately 3.6% this year. For 2026, the metric is expected to rise year over year and be in the range of 3.6-3.9%.
JPMorgan’s Price Performance & Valuation Analysis
This year, shares of JPMorgan have soared 20.4% compared with a 3.7% rise for the S&P 500 Index. Further, the stock has fared better than its peers, Bank of America and Wells Fargo.
YTD Price Performance
Image Source: Zacks Investment Research
From a valuation perspective, the stock appears slightly expensive relative to the industry. The stock is currently trading at a forward 12-month price/earnings (P/E) of 15.26X. This is above the industry’s 14.55X, reflecting a stretched valuation.
P/E F12M
Image Source: Zacks Investment Research
Also, JPM stock is trading at a premium compared with Bank of America and Wells Fargo. At present, Bank of America has a forward 12-month P/E of 11.98X, and Wells Fargo is trading at a forward 12-month P/E of 12.93X.
Buy, Sell or Hold JPMorgan Stock?
Earnings estimates for JPMorgan for 2025 and 2026 have been revised upward over the past week. The positive estimate revision depicts bullish analyst sentiments for the stock.
JPM’s Earnings Estimates Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for JPM’s 2025 earnings implies a 6.1% fall year over year owing to macro headwinds and higher non-interest expenses. Management anticipates non-interest expenses to be almost $95 billion this year, up from $91.1 billion in 2024. On the other hand, the consensus estimate for 2026 earnings suggests 5.3% growth.
Earnings Estimates
Image Source: Zacks Investment Research
JPMorgan’s strategic expansion, resilient capital markets business, strong dividend growth and fortress balance sheet position it well for long-term gains. However, macroeconomic headwinds, deteriorating asset quality and rising non-interest expenses pose near-term risks.
While the stock trades at a premium valuation, upward earnings revisions and JPM’s industry leadership justify a cautious buy for long-term investors. Those seeking stability, income and exposure to a diversified banking giant may find JPMorgan attractive, but should be prepared for short-term volatility due to economic uncertainty and elevated credit risks.
Image: Bigstock
Rate Cut Buzz Lifts JPM Stock to New Highs: Is There More Upside Left?
Key Takeaways
JPMorgan’s (JPM - Free Report) shares touched an all-time high of $289.41 on Thursday as incoming economic data, including jobless claims and the third estimate for gross domestic product (GDP) for the first quarter, indicate interest rate cuts are likely to be sooner than previously expected.
While the Federal Reserve is continuing with its ‘wait and watch’ stance on the rate path due to ambiguity over Trump’s tariff plans, market participants are increasingly gaining confidence in at least two cuts this year. Rate cuts are expected to be counterproductive to JPM’s net interest income (NII) expansion because of its highly asset-sensitive balance sheet.
Nonetheless, at the Investors Day conference on May 19, JPMorgan’s chief financial officer, Jeremy Barnum, noted that the company’s 2025 NII could increase by $1 billion more than previously guided. But he stopped short of making any change to the NII outlook of $94.5 billion (up almost 2% year over year) as it's too early to comprehend the actual impact of various macroeconomic headwinds.
Similar to JPM, its close peers – Bank of America (BAC - Free Report) and Wells Fargo (WFC - Free Report) – anticipate NII to grow this year. Bank of America anticipates NII to jump 6-7% year over year, while Wells Fargo expects the metric to grow 1-3%.
Hence, as the Fed lowers interest rates, demand for loans is likely to improve. This, along with the company’s branch expansion initiative, is expected to drive NII.
JPMorgan’s Branch Openings & Opportunistic Acquisitions
With 4,975 branches as of March 31, 2025, more than any other U.S. bank and a presence in all 48 contiguous states, JPM continues to invest in brick-and-mortar to strengthen its competitive edge in relationship banking, despite the digital shift. In May, the company added 14 new Financial Centers in affluent markets. It now has 16 such centers, aiming to double by 2026.
JPMorgan supports its expansion with 14 remote offices offering virtual services for affluent clients, blending digital convenience with in-person expertise. In 2024, it opened nearly 150 branches and plans to add 500 more by 2027 to deepen relationships and boost cross-selling across mortgages, loans, investments and credit cards.
JPMorgan isn’t alone in branch expansion. Bank of America is growing its 3,651-center network, with 40 new openings last year and 110 more by 2027, despite most interactions being digital. Meanwhile, Wells Fargo is trimming branches (down 3% to 4,177 in 2024) while modernizing its network, upgrading 730 locations last year with full revamps planned over five years.
Additionally, JPMorgan has expanded through strategic acquisitions, including a larger stake in Brazil’s C6 Bank, partnerships with Cleareye.ai and Aumni, and the 2023 purchase of First Republic Bank. These moves boosted profits and support its strategy to diversify revenues and grow digital and fee-based offerings.
Resurgence in Capital Markets to Support JPM in the Long Run
JPMorgan’s capital markets business, which includes investment banking or IB and markets, witnessed a robust comeback last year, with IB fees (in the Commercial & Investment Bank or CIB segment) jumping 37% year over year. In 2023, IB fees declined 5%, while plunging 59% in 2022. Likewise, as trading volume and market volatility remained high in 2024, markets revenues benefited and grew 7%.
Despite tariff-related ambiguity and extreme market volatility, the performance of the company’s capital markets business was decent in the first quarter of 2025. However, near-term IB prospects are cloudy due to economic uncertainty, which will likely hurt JPM’s IB business in the second quarter as deal-making activities have largely stalled. IB fees in the CIB segment are expected to be down in the mid-teens range from $2.46 billion in the prior-year quarter.
On the other hand, JPMorgan’s markets revenues are projected to grow in the mid-to-high single-digits range for the second quarter of 2025. This is likely to be driven by a significant rise in market volatility and higher client activity.
Once there is a reduction in the level of uncertainty, JPMorgan is expected to capitalize on it, driven by a solid pipeline and origination of new activity. Also, the company will leverage its leadership position in the IB business (rank #1 for global IB fees in the first quarter of 2025) once the macro situation changes. Hence, the company’s long-term outlook for the IB business remains strong.
JPMorgan’s Fortress Balance Sheet and Solid Liquidity
As of March 31, 2025, JPM had a total debt of $471.9 billion (the majority of this is long-term in nature). The company's cash and due from banks and deposits with banks were $425.9 billion on the same date. The company maintains long-term issuer ratings A-/AA-/A1 ratings from Standard and Poor’s, Fitch Ratings and Moody’s Investors Service, respectively.
Hence, JPM continues to reward shareholders handsomely. In March, the company announced a 12% hike in its quarterly dividend to $1.40 per share. This followed an 8.7% increase in dividends in September 2024. In the last five years, it hiked dividends five times, with an annualized growth rate of 6.77%.
JPM Dividend Trend
Image Source: Zacks Investment Research
Similar to JPM, Bank of America and Wells Fargo have been increasing their dividend payouts regularly. Bank of America raised its dividend four times in the last five years, while Wells Fargo hiked it six times.
JPMorgan also authorized a new share repurchase program of $30 billion, effective July 1, 2024. As of March 31, 2025, almost $11.7 billion in authorization remained available.
JPMorgan’s Asset Quality Weakens
JPMorgan’s asset quality has been deteriorating. While the company recorded negative provisions in 2021, a substantial jump in provisions was recorded in the years after that because of the worsening macroeconomic outlook. The metric surged 169% in 2022, 45.9% in 2023 and 14.9% in 2024. Similarly, net charge-offs (NCOs) grew 117.6% in 2023 and 39.1% in 2024.
As interest rates are less likely to come down substantially in the near term, it is expected to hurt the borrowers’ credit profile. As it remains vigilant about the effects of continuous high rates, the impact of tariffs on inflation and quantitative tightening on its loan portfolio, its asset quality is expected to remain subdued in the near term.
The company expects card NCO rates to be approximately 3.6% this year. For 2026, the metric is expected to rise year over year and be in the range of 3.6-3.9%.
JPMorgan’s Price Performance & Valuation Analysis
This year, shares of JPMorgan have soared 20.4% compared with a 3.7% rise for the S&P 500 Index. Further, the stock has fared better than its peers, Bank of America and Wells Fargo.
YTD Price Performance
Image Source: Zacks Investment Research
From a valuation perspective, the stock appears slightly expensive relative to the industry. The stock is currently trading at a forward 12-month price/earnings (P/E) of 15.26X. This is above the industry’s 14.55X, reflecting a stretched valuation.
P/E F12M
Image Source: Zacks Investment Research
Also, JPM stock is trading at a premium compared with Bank of America and Wells Fargo. At present, Bank of America has a forward 12-month P/E of 11.98X, and Wells Fargo is trading at a forward 12-month P/E of 12.93X.
Buy, Sell or Hold JPMorgan Stock?
Earnings estimates for JPMorgan for 2025 and 2026 have been revised upward over the past week. The positive estimate revision depicts bullish analyst sentiments for the stock.
JPM’s Earnings Estimates Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for JPM’s 2025 earnings implies a 6.1% fall year over year owing to macro headwinds and higher non-interest expenses. Management anticipates non-interest expenses to be almost $95 billion this year, up from $91.1 billion in 2024. On the other hand, the consensus estimate for 2026 earnings suggests 5.3% growth.
Earnings Estimates
Image Source: Zacks Investment Research
JPMorgan’s strategic expansion, resilient capital markets business, strong dividend growth and fortress balance sheet position it well for long-term gains. However, macroeconomic headwinds, deteriorating asset quality and rising non-interest expenses pose near-term risks.
While the stock trades at a premium valuation, upward earnings revisions and JPM’s industry leadership justify a cautious buy for long-term investors. Those seeking stability, income and exposure to a diversified banking giant may find JPMorgan attractive, but should be prepared for short-term volatility due to economic uncertainty and elevated credit risks.
JPM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.