The era of relying on a narrow group of market leaders may be coming under pressure. As earnings growth begins to spread across a wider range of companies, investors face a critical question: where will corporate profits grow fastest over the next year?
J.P. Morgan Private Bank believes it has identified where that growth is likely to appear.
The firm has highlighted four sectors it expects to deliver durable earnings expansion through 2026 and into 2027, extending well beyond the technology names that have dominated investor attention.
J.P. Morgan shares four stock sectors set for growth
The bank highlights four U.S. equity sectors primed for a surge: financials, industrials, information technology, and a combined utilities and energy infrastructure category.
Financials
J.P. Morgan Private Bank describes the current rate environment as elevated yet stable, a setup that benefits large banks by widening net interest margins.
Lending activity provides a tangible measure of that underlying strength, and the trend line is moving in the right direction for bank investors.
Year-over-year bank loan growth hit 6.7% in the first quarter of 2026, rebounding from lows near 2% in early 2024, according to the Federal Reserve‘s H.8 release on the assets and liabilities of commercial banks.
The blended year-over-year earnings growth rate for the financials sector rose to 21.8% in the first-quarter of 2026 from 14.8% at the end of March, according to FactSet’s Earnings Insight.
Major U.S. banks, including J.P. Morgan Chase, Citigroup, Bank of America, and Morgan Stanley, reported Q1 results during this period.
Sector valuations have pulled back alongside broader macroeconomic uncertainty, even though those underlying profit fundamentals remain intact, the bank noted.
Industrials
The core argument from J.P. Morgan Private Bank centers on a shift in the drivers of stock returns, away from macroeconomic timing and toward profit strength.
Spending on artificial intelligence infrastructure, defense systems, power grid upgrades, and reshored manufacturing is producing structural demand across multiple industries, the bank noted.
The AI-driven supercycle is fueling record capex and rapid earnings expansion. This momentum is spreading geographically and across a diverse list of industries, from technology and utilities to banks, healthcare, and logistics, creating winners and losers in the process
Analysts project calendar year 2026 earnings growth of 22.8% for the S&P 500, with the Information Technology, Energy, and Communication Services sectors leading projected revenue growth across the index, according to FactSet’s June Earnings Insight.
That momentum is spreading across industries from technology and utilities to banking, healthcare, and logistics, creating distinct winners and losers, Lakos-Bujas added.
Information technology
J.P. Morgan Private Bank described information technology as the core driver of S&P 500 earnings, with the trajectory steepening considerably in recent quarters.
Consensus estimates project year-over-year earnings-per-share growth for the tech sector in the mid-to-high 40% range during the first half of 2026, FactSet reported.
Microsoft, Amazon, Alphabet, Meta, and Oracle are collectively deploying nearly $690 billion in capital expenditure during 2026, Penn Capital noted.
Goldman Sachs projects hyperscaler capital spending from 2025 through 2027 will reach $1.15 trillion, more than double the $477 billion spent from 2022 to 2024.
Within the sector, J.P. Morgan sees growing separation between capital-intensive infrastructure companies and pure software businesses, favoring semiconductors and hardware manufacturers.
Utilities and energy
After roughly two decades of flat electricity consumption across the United States, power demand is now surging because of data center construction and grid modernization, Fidelity’s Pranay Kirpalani noted in the firm’s 2026 AI outlook.
Electricity demand will likely exceed the nation’s 2024 generation capacity starting this year and keep rising through the decade’s end, according to J.P. Morgan Private Bank.
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Morgan Stanley Research estimates U.S. data center power demand alone could reach 74 gigawatts by 2028, with an anticipated shortfall of 49 gigawatts.
“Power is the feedstock for AI,” Pranay Kirpalani, manager of Fidelity’s Select Utilities Portfolio, explained in the firm’s 2026 AI outlook.
He noted that AI racks and semiconductors are extremely power-hungry, with a single ChatGPT query consuming roughly 10 times as much power as a Google search.
That supply-demand imbalance gives utilities companies the pricing power and long-term revenue visibility that growth investors typically associate with technology stocks, not utility providers.
Cheaper stock prices meet improving profit outlooks across all sectors
Recent market volatility has compressed equity valuations across all four groups, but J.P. Morgan Private Bank argues that this creates opportunity rather than elevated risk.
“Investors must walk a fine line, not overreacting to short-term headlines, but not ignoring long-term shifts either,” Grace Peters, Co-Head of Global Investment Strategy at J.P. Morgan Private Bank, said in the firm’s Mid-Year Global Investment Outlook.
The S&P 500 forward price-to-earnings ratio stood at 20.9 as of early May, above both the five-year average of 19.9 and the ten-year average of 18.9, and up from 19.7 at the end of Q1, FactSet indicated.
The index traded at a forward ratio of 22.0 at the end of the fourth quarter, meaning valuations have declined while earnings estimates have risen.
For investors holding index funds or building sector positions, J.P. Morgan’s broad message is that this earnings cycle is built for longevity rather than a short-lived upswing.
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