JPMorgan Asset Management advises investors to shift toward quality stocks during AI-driven market volatility, emphasizing their historical resilience during downturns. Quality stocks—defined by strong cash flow, consistent earnings, and competitive advantages—have underperformed recently but typically rebound sharply when broader markets decline.

The bank highlights that quality stocks are currently in their worst performance stretch in nearly two decades, underperforming the MSCI World Index by almost 5% in 2025. However, historical data shows quality stocks outperformed during the 2007-2008 financial crisis, delivering 7 percentage points of excess returns in those years.

During market drawdowns, quality stocks have outperformed 78% of the time over the past 30 years, with a median excess return of 3.4 percentage points. Investors should prioritize funds like the Invesco S&P 500 Quality ETF (SPHQ), which limits exposure to AI hyperscalers, to avoid concentration risks in speculative themes.