22% is the number that matters: JPMorgan projects U.S. healthcare net income will rise about 22% in 2027 after a roughly 1% decline in 2026, a swing the bank says could make the sector a key near-term earnings driver for the S&P 500. The projection and the recommendation to revisit healthcare come from a note published by JPMorgan strategists led by Dubravko Lakos-Bujas on July 30, 2026. JPMorgan singled out households, healthcare companies and equity investors as the most directly affected groups if earnings accelerate. The bank argues the sector has been underowned and discounted, creating a favourable risk-reward for patient investors.
22% is the swing in sector earnings JPMorgan projects between 2026 and 2027, a change the bank says could push healthcare into the top tier of S&P 500 profit contributors outside technology.
Why have investors ignored healthcare?
JPMorgan says money flowed heavily into artificial intelligence and AI-adjacent themes over the last three years, leaving healthcare increasingly overlooked. The bank adds that investor sentiment also soured amid U.S. debates over drug pricing, Medicaid funding cuts, reimbursement constraints and broader policy uncertainty, pressures that have weighed on valuations and ownership across the sector.
Which companies does JPMorgan recommend and why?
The strategists named specific picks in both biopharmaceuticals and medical technology. On the drug side they highlighted Eli Lilly, Gilead Sciences and AbbVie. In medical technology and life-science tools the note singles out Danaher and Thermo Fisher Scientific. JPMorgan said these firms combine improving financial fundamentals with comparatively attractive valuations versus the broader market.
The note argued healthcare offers durable growth, strong profitability and diversification benefits compared with heavily concentrated AI exposure. JPMorgan described the sector as trading at a meaningful discount to the broader market and said that low pricing plus the prospect of accelerating earnings growth create a favourable risk-reward profile for investors who have underweighted the space.
What could derail the bullish case?
JPMorgan flagged a set of policy and patent risks. The strategists pointed to a looming patent cliff in 2028 when several major drugs face expiration, calling it a material future risk to earnings. They also listed continued drug-pricing reform, Medicaid funding debates, reimbursement shifts and tariffs as potential headwinds, while noting that many of these concerns are already reflected in current valuations and ownership levels.
Households, healthcare firms and equity holders are the parties most likely to feel those outcomes. If the bank's 2027 earnings forecast proves correct, large-cap S&P 500 constituents in healthcare stand to contribute meaningfully to index profit growth. But if policy or patent shocks hit, the same firms could underperform the market.
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JPMorgan sets 2027 earnings as the next inflection point and flags patent expirations in 2028 as the material risk investors should track.
This article was created with AI assistance.
