Investors Hunt for AI Winners and Losers | The China Show 2/24/2026
Speakers
Summary
- Macro Backdrop (Feb 2026): Markets are reopening post-Lunar New Year with high volatility. A "scare trade" has gripped Wall Street, driven by fears that AI agents will rapidly displace white-collar jobs and intermediaries, leading to a deflationary economic spiral.
- Tariff Regime: The US Supreme Court struck down President Trump's previous tariffs, but a new 15% global flat rate is being implemented. This effectively lowers the rate for China (from ~31% to 24%) but raises it for US allies, leveling the playing field in a way that paradoxically benefits China's relative competitiveness.
- Geopolitics: Tensions are escalating. China has placed 20 Japanese firms (including Mitsubishi Heavy) on an export control list for dual-use items. Panama has seized ports operated by CK Hutchison. US-Iran tensions are driving oil prices higher ($70+ Brent).
- Sector Rotation: A clear rotation is emerging out of "Intermediary" businesses (Software, Gig Economy, Traditional Finance) and into "Hard Assets" (Copper, Materials, Semiconductors) and AI Infrastructure.
Trade Ideas
Harris argues, "Asia really stands out because almost all of our countries have clear, dedicated government strategies to developing AI infrastructure." Unlike the US, where the "scare trade" dominates, Asian markets are viewed as the "factory" for the AI revolution (infrastructure, chips, energy). They are building the physical layer, making them resilient to the software displacement narrative. LONG Asian equities with a focus on AI infrastructure and government-backed strategic sectors. US tariffs on Asian exports could dampen growth; China's economic recovery remains uneven.
Anthropic released a warning/update that their "Claude" tool can effectively replace/modernize COBOL coding, which powers 40% of banking systems and 95% of ATM transactions. IBM relies heavily on legacy mainframe revenue tied to COBOL maintenance. If AI can automate the modernization of this code for a fraction of the cost, IBM's "sticky" legacy revenue evaporates. SHORT IBM as a "legacy custodian" being disrupted by code-generating AI. Regulatory hurdles in banking may slow the adoption of AI-written code for critical financial infrastructure.
US-Iran tensions are escalating, with reports of potential military strikes and the evacuation of non-essential personnel from Beirut. Brent crude is reacting, up significantly. Geopolitical risk premium is returning to the energy market. Any kinetic action involving Iran threatens the Strait of Hormuz and global supply, forcing a repricing of risk assets in the energy complex. LONG Oil futures and Energy equities as a hedge against conflict. A diplomatic deal (negotiations ongoing in Geneva) could rapidly deflate the war premium.
Sharma states, "Semiconductors are huge winners... material stocks are huge winners." Wong adds, "We continue to bang the table on... the materials sector... copper and copper mining." The AI "scare trade" assumes massive displacement, but that displacement requires massive compute. This creates a bifurcated market: software/labor loses, but the physical infrastructure (chips) and the power grid inputs (copper) required to run the AI explode in demand. LONG the "Pick and Shovel" plays of the AI economy. A recession caused by white-collar job losses could dampen overall demand for energy and materials.
Sharma argues that by 2028, AI agents will handle most consumer tasks, bypassing apps and intermediaries. He notes, "Intermediary sectors... have real risk." Business models based on "friction with a friendly face" (food delivery, ride-hailing, retail banking UIs) lose their moat when an AI agent executes the task directly for the consumer at the lowest price. This leads to margin compression and volume loss for aggregators. SHORT intermediaries and software companies that rely on seat-based pricing or app engagement. Regulatory intervention to tax AI or protect jobs could delay this transition; consumer adoption of agents may be slower than the 2-year timeline.
Jamie Dimon
CEO, JPMorgan Chase (via clip)
Dimon explicitly states regarding the AI disruption: "In my view, we will be a winner... we've always had the strategy to use technology to do a better job." While "intermediaries" are at risk, massive incumbents with the capital to acquire and integrate the best AI tech (rather than being displaced by it) will consolidate market share. Dimon views this as a "rising tide" for the dominant players. LONG JPM as a defensive "winner" in the financial sector consolidation. Disruption of the banking model occurs faster than JPM can adapt; regulatory caps on AI in finance.
David Wong
Senior Investment Strategist, AllianceBernstein
Despite the gloom, Wong notes, "RevPAR numbers for some of the lodging companies have been sequentially improving... we are seeing a gradual recovery [in Chinese travel]." While the US worries about AI job losses, the Chinese consumer is engaging in "experience" spending post-reopening. Visa-free access policies are accelerating this trend. LONG Travel and Hospitality, specifically those with exposure to Chinese outbound tourism. A global economic slowdown or renewed geopolitical tensions could curb discretionary travel spending.
Up Next
This Bloomberg Markets video, published February 24, 2026, features Richard Harris, News / Annabelle Droulers, News / Magdalena Osumi, Alok Sharma, Jamie Dimon, David Wong discussing AAXJ, EWJ, IBM, WTI, SMH, XLB, COPX, XLF, DASH, UBER, IGV, JPM, JETS, H. 7 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Richard Harris, News / Annabelle Droulers, News / Magdalena Osumi, Alok Sharma, Jamie Dimon, David Wong · Tickers: AAXJ, EWJ, IBM, WTI, SMH, XLB, COPX, XLF, DASH, UBER, IGV, JPM, JETS, H