JPMorgan could reach $1 trillion valuation

CNBC’s Jim Cramer on Tuesday told investors why he thinks JPMorgan might be the next non-tech stock to hit $1 trillion in market cap.

“JPMorgan’s got something special. It excels at so many things: lending, capital markets, trading, and perhaps most important, statesmanship, with CEO Jamie Dimon performing at a level that’s rare for any industry,” he said. “JP Morgan has always been a top-quality bank, but it’s now become a fantastic place to work, and its global reach is unmatched. There’s a reason its market cap is so much bigger than the other major banks.”

Cramer emphasized how difficult it is for companies to top $1 trillion, noting that with the exception of Berkshire Hathaway — which is worth around $1.05 trillion — the only outfits to reach that threshold are tech giants: Nvidia, at $4.25 trillion, Microsoft, at $3.78 trillion, Apple, at $3.35 trillion, Alphabet, at $3.04 trillion, Amazon at $2.50 trillion, Meta, at $1.96 trillion, Broadcom, at $1.70 trillion, and Tesla, at $1.36 trillion.

Currently, JPMorgan is worth around $850 billion, while most of its peers fall below $300 billion. The bank hit a new 52-week high on Tuesday and finished the session up 0.09%. The stock is up 28.99% year-to-date.

Cramer compared JPMorgan’s stock to a “horse that’s bided its time but is now at the far turn,” listing off a few reasons why he thinks its valuation is heading higher. He noted that JPMorgan isn’t the only bank that’s “making a ferocious move,” noting that the sector as a whole has been performing well. Other financial giants have seen substantial gains this year, Cramer said, including Citigroup, Wells Fargo, Bank of America, Goldman Sachs and Morgan Stanley.

He said the “real rocket fuel” for JPMorgan and peers is the expansion of their price-to-earnings multiples, saying Wall Street is willing to pay up for banks. Cramer noted that banks’ are seeing both their earnings and price-to-earnings multiples increase, which he said is “remarkable,” especially as Wall Street waits to hear from the Federal Reserve.

“I’ve been waiting years for the banks to get higher price-to-earnings multiples. They’re incredibly important to the broader market. When the banks are winning, it’s a terrific sign for the overall trading,” he said. “Remember this tomorrow if the averages take a hit from the Fed, because once multiple expansion starts, it’s not easily reversed — we might be ok. These are hard-fought moves and I bet they’re just the beginning.”

JPMorgan declined to comment.

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Disclaimer The CNBC Investing Club Charitable Trust owns shares of Apple, Amazon, Microsoft, Nvidia, Meta, Broadcom, Wells Fargo and Goldman Sachs.