Nur Cristiani, Head of Investment Strategy for Latin America at J.P. Morgan, believes the artificial intelligence supercycle has yet to reach its peak: value is only beginning to shift from infrastructure to platforms and applications, opening a new phase of opportunities. In this interview with Funds Society, she discusses the concentration risks facing Latin American investors, the less obvious opportunities the firm is monitoring—from defense to gold and emerging markets—and why she believes there is still room for investors who have not yet taken positions.
What stage of the AI supercycle are we in: early, accelerating, or mature?
We believe we are still in the acceleration phase. So far, much of the value created in the markets has been driven by infrastructure companies, both physical and digital. Only recently have we begun to see part of that value shift toward the platform and application layers.
Comparisons with the dot-com bubble come up constantly. Is that a valid analogy, or does it create more confusion than clarity?
When we talk about a “bubble,” we need to be careful and distinguish whether we are referring to market valuations or episodes of exuberance. We do see some exuberance in certain AI-related segments, but we do not believe we are at a point of valuation excess in the technology sector. In fact, if we consider growth expectations over the next three years, technology sector valuations remain below those of other sectors in the market. And while there is always uncertainty about the sustainability of recent growth trends, the reality is that technology companies continue to significantly outperform market expectations quarter after quarter. Moreover, comparisons with the dot-com bubble often imply high levels of leverage. Today’s situation is different: these companies are funding their growth with their own revenues and earnings, not with debt.
How are your high-net-worth clients in Latin America responding to this cycle? Are they more anxious to invest or more cautious?
Our clients have participated in this trend and maintain varying levels of exposure depending on their investment objectives and mandates. However, what we are seeing today is that every new dollar invested is seeking greater diversification. Not necessarily away from the AI theme, but toward broader exposure to other sectors and asset classes that could benefit from the next phase of value creation.
What is the most common mistake sophisticated private investors make during a technology cycle of this magnitude?
Concentration. In the early stages of value creation, some positions can appreciate significantly and end up representing an excessive share of a portfolio. This can create too much dependence on a single sector—or even a single company. That is why it is important to use those gains as an opportunity to diversify and maintain portfolio resilience, whether through active or passive strategies.
Is there a risk of becoming overexposed to AI within a portfolio? What would be a reasonable allocation to this theme for a long-term investor?
Rather than a risk of overexposure to AI itself, we see a risk of concentration in specific sectors or companies. We believe AI will drive productivity and efficiency gains across the entire economy, creating growth opportunities in multiple industries. However, asset selection will be critical because companies will benefit from this technology at different times and to different degrees.
When designing an AI allocation for a Latin American client, where do you start: companies directly linked to AI, enabling infrastructure, or thematic funds?
We always start with the core portfolio—that is, a well-diversified strategy aligned with the client’s objectives and risk tolerance. From that foundation, we add complementary positions to overweight specific themes or sectors. We currently have a positive view on technology, as well as related sectors such as industrials and utilities, and that view is reflected in our asset allocation recommendations. How that exposure is implemented depends on each client. We offer actively managed solutions, where professional managers continuously rebalance portfolios, but we also work with clients who prefer to build this exposure directly through public or private markets.
Beyond the major U.S. technology companies, are there less obvious opportunities that J.P. Morgan is watching closely?
We see attractive opportunities in the security and defense sectors, both in public and private markets, in an increasingly fragmented global environment. We also believe gold remains an important portfolio diversifier. And speaking of diversification, we see compelling opportunities in emerging markets, particularly in an environment where we expect the U.S. dollar to remain structurally weak.
What is the main AI-related risk that the market is still underestimating?
Our main concern is the circularity of certain investments and the exuberance we see in some specific segments related to this technology. There will be winners and losers, which is why careful asset selection and active management will remain essential.
Regulation, geopolitics, market concentration: which of these factors creates the most uncertainty when building a long-term investment thesis?
All three. That is precisely why the foundation of our recommendations is always a well-diversified portfolio across sectors, themes, and regions. On top of that foundation, we add active thematic allocations to the opportunities we believe are best positioned to benefit under different scenarios.
For the Latin American investor who has not yet taken a position, is it already too late, or does the cycle still have room to run?
It is never too late to be invested. We remain constructive on the markets and on the opportunities we see ahead, both in public and private assets. As stewards of our clients’ wealth, whose objective is to preserve and grow their assets over the long term, we believe staying out of the market can be riskier than weathering temporary periods of volatility.
