American companies already dominate the global stock market in terms of size. A new chart from JPMorgan Asset Management shows this trend is likely to continue. The company attributes the boom to artificial intelligence.
In the long-term capital market assumptions for 2025 released Monday by JPM, the team projects that the share of U.S. companies’ market capitalization in the total global stock market will increase from 64% currently to 60% in 2037. Still, as shown in the chart below, the United States (in green) would maintain a large lead over China (in red), the second largest share of the global stock market.
Monica Issar, global head of multi-asset and portfolio solutions at JPMorgan Asset Management, told Yahoo Finance during a media roundtable on Monday that the United States will continue to dominate in terms of market capitalization share as The benefits of artificial intelligence extend beyond a few big tech names that have dominated the market. have gathered over the past year from companies in various sectors.
Issar gave two reasons for his prediction: revenue generation and margin improvement. The first will come from money invested in AI for the benefit of companies outside of big tech. This happens when tech companies buy AI chips like Nvidia (NVDA), and as they need more power, these AI operators are forced spend with businesses in Utilities (XLU) and energy (XLE) sectors.
As AI makes businesses more efficient and eliminates the simplest tasks, thereby reducing costs, American businesses are expected to see their profit margins increase.
“It will be primarily the United States, and then obviously Europe will follow, because we’re starting to see some adoption there,” Issar said.
To put the current American domination into perspective, just that of Nvidia (NVDA) market capitalization alone is larger than that of most other G7 countries, Torsten Sløk, Apollo’s chief global economist, wrote in a research note on Thursday. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
Certainly, Sløk noted that this could pose a risk to the market as a whole.
“Global stock markets, including stock retirement allocations, are essentially tied to Nvidia,” Sløk wrote. “Let’s hope Nvidia’s value doesn’t drop significantly.”
Others, however, have a more optimistic view of the AI superpower’s dominance. In a recent research note explaining why the S&P 500 (^GSPC) could average annual returns above 10% over the next decadeNicholas Colas, co-founder of DataTrek Research, pointed out that the United States is at the forefront of AI adoption and well-positioned to dominate amid “global adoption” of the technology.
