Prof G Markets JPMorgan’s Playbook for a 10-15% Correction (or Worse) — ft. Michael Cembalest
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Nov 21, 2025 
Michael Cembalest, Chairman of Market and Investment Strategy at J.P. Morgan, dives into the turbulent waters of today’s market. He forecasts a 10–15% correction driven by the AI boom and outlines risks for 2026, including geopolitical tensions with China and power constraints on AI growth. Cembalest shares insights on shifting client risk profiles, advocating for a defensive portfolio mix, and highlights the fragility of concentrated market caps. He emphasizes the need for investors to prepare for potential profit-taking sparks and market volatility.
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AI Buildout Dominates Recent Market Gains
- Tech capex since Nov 2022 is hugely concentrated in ~40 AI-related stocks and dominates recent profits and capex.
- This AI buildout rivals historical national projects in GDP share and may be overbet relative to realized profits.
AI Capex Equals Historic Nation Projects
- Tech capital spending in 2025 equals the relative GDP share of major historical nation-building projects combined.
- That scale implies huge expectations and risk if profit generation doesn't follow the spending.
AI Spending Props GDP Growth
- Tech capex now materially drives U.S. GDP growth and has bailed out headline growth figures recently.
- That makes the macro outlook more dependent on continued AI investment than typical sectors.