In the last year or so, I’ve noticed an interesting pattern involving JPMorgan Chase (NYSE:JPM), the largest U.S. bank. Specifically, CEO Jamie Dimon sounds rather fearful about the U.S. economy in his widely followed speeches, but the bank buys huge amounts of the stocks of many companies.
For example, in February, Dimon told CNBC that he was “cautious about everything” and proclaimed that the chances of the U.S. entering a recession were over 50%. But in the first quarter of the year, JPMorgan greatly increased its exposure to many stocks. What’s more, the bank’s actions, rather than Dimon’s warnings, have proven to be accurate since the beginning of 2023. The S&P 500 has surged about 40% since that time. And since the bank generated $2.7 billion of revenue by trading equities last quarter, I believe investors can profit handsomely by buying several JPMorgan stock picks.
Microsoft (MSFT)
As of the end of the first quarter, Microsoft (NASDAQ:MSFT) was JPMorgan’s largest holding, with the bank owning 127.7 million shares of the tech giant. During the quarter, the bank bought 3.69 million more shares of MSFT stock.
In past articles about Microsoft, I’ve asserted that the conglomerate is well-positioned to benefit from increased demand for its artificial intelligence (AI) tools and the growth of its Microsoft 365 offering. The former thesis, at least, appears to be playing out as the company’s share of the cloud computing market increased to 25% in Q1 from 23% in Q1 of 2023.
Further, I expect the company to get a boost from the likely proliferation of AI PCs which will enable it to sell software with higher margins over the longer term. Indeed, the software giant is already offering its CoPilot AI tool in conjunction with PCs for $20 to $30 per user per month.
Investor’s Business Daily gives MSFT stock a relatively high Composite Score of 83 and ranks it as the top name in its Computer Software-Desktop group.
Mastercard (MA)
Mastercard (NYSE:MA) was ninth on JPMorgan’s list of holdings as of the end of Q1, and the bank held 25.59 million shares of the credit card network. Last quarter, JPMorgan increased its ownership of the name by 1.68% or 423,000 shares.
In Q1, Mastercard’s revenue popped 11.4% versus the same period a year earlier to $6.35 billion, while its gross dollar volume soared 10% year-over-year to $2.3 trillion, excluding currency fluctuations. Importantly, its operating income surged 15% year-over-year to $3.6 billion.
The credit card network was boosted by “healthy consumer spending, strong cross-border volume growth of 18%1 year-over-year, and new deal wins in every region,” said CEO Michael Miebach.
Although the U.S. economy appears to be slowing, the labor market remains strong enough to enable U.S. consumer spending to generally keep rising. The latter trend, of course, is quite positive for MA stock.
Texas Instruments (TXN)
Chip Texas Instruments (NASDAQ:TXN) was JPMorgan’s 39th largest holding at the end of Q1 and the bank owned 28.71 million shares of TXN stock. However, the bank did increase the number of shares of the name that it owned by a hefty 17% last quarter.
Moreover, there are multiple, major reasons to be bullish on TXN stock at this point. First CEO Haviv Ilan on May 30 disclosed that the company was on track to generate $12 per share of free cash flow in 2026. That means that the stock is changing hands at a fairly low 16 times its likely 2026 free flow.
What’s more, activist investor Elliott Investment Management has bought over $2.5 billion of TXN stock and indicated that it would pressure the firm to spend less money than planned on expanding its manufacturing capacity. To the extent that Elliott is able to accomplish that goal, TXN is likely to climb going forward. As a result, I view the name as one of the top JPMorgan stock picks.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
