Dimon Says There's Always Surprise in a 'Credit Cycle'
Speakers
Summary
- Jamie Dimon warns of "cockroaches" in the Private Credit sector, citing recent blowups (Tricolor, First Brands) as evidence that more hidden risks likely exist.
- JPMorgan is adopting a cautious stance on aggressive underwriting, specifically noting a divergence where Morgan Stanley is active in Data Centers while JPM remains conservative.
- Dimon highlights that markets are "highly valued" and explicitly flags risks within the AI and Software sectors regarding valuations and stability.
- JPM aims to "win" in 75% of business lines but acknowledges niche competitors will take share; the bank is focusing on AI for internal efficiency rather than aggressive external lending exposure.
Trade Ideas
Dimon referred to recent blowups (Tricolor and First Brands) as "cockroaches," stating, "If you see one, there's likely to be others." Private Credit has boomed in a low-rate environment. If a major bank CEO sees systemic "cockroaches" (hidden defaults/risks) emerging as the cycle turns, the entire asset class faces repricing and liquidity risks. AVOID. The risk/reward profile is deteriorating if hidden defaults are beginning to surface. The "soft landing" scenario plays out perfectly, and default rates remain historically low, proving Dimon too bearish.
Dimon notes JPM expects to "win in 75 out of 100 areas" and is avoiding "dumb things" like aggressive lending just to boost net interest income. In a credit cycle turn, the bank with the "fortress balance sheet" that refused to chase yield (aggressive lending) outperforms. JPM's internal use of AI for efficiency adds a productivity tailwind without the valuation risk of pure-play AI stocks. LONG. Quality compounder that benefits from flight-to-safety during credit stress. Regulatory caps on size or succession uncertainty (Dimon's eventual departure) could weigh on the multiple.
Dimon mentioned "risks with AI and software and those companies" and noted that "things are highly valued." While JPM uses AI internally, Dimon distinguishes between the *utility* of the tech and the *valuation* of the sector. High valuations combined with a credit cycle warning suggests a potential compression in multiples for high-growth, high-duration assets. WATCH. Be wary of valuation compression in pure-play AI/Software names if credit conditions tighten. AI productivity gains justify the premium valuations, leading to a "melt-up" despite credit concerns.
"You've seen Morgan Stanley be very active in sort of underwriting data centers... I think JPMorgan has been a bit more cautious." A divergence in risk appetite is appearing. If Dimon's view on a turning credit cycle is correct, the bank taking the more aggressive underwriting stance (MS) on capital-intensive projects (Data Centers) carries higher risk of hung deals or credit losses. WATCH. Monitor MS for exposure to commercial real estate/data center credit stress relative to JPM. The AI infrastructure boom continues unabated, and MS captures significant fees while JPM misses out on the growth.
Up Next
This Bloomberg Markets video, published February 24, 2026, features Jamie Dimon discussing BKLN, JPM, IGV, BOTZ, MS. 4 trade ideas extracted by AI with direction and confidence scoring.