JPMorgan Chase notes that market concerns about "high investment, low return" in AI capital expenditure over the past year are changing. Latest data shows that hyperscale cloud service providers' cloud business backlogs have surged by over 150% year-on-year, reaching approximately $1.7 trillion, far exceeding the capital expenditure increase of about 80% over the same period. This significant gap indicates that the potential revenue returns from AI infrastructure investments are surpassing market expectations, and the valuation digestion pressure on tech giants may be nearing its end, with Mag 7's valuation multiples possibly having bottomed out. Amazon CEO Andy Jassy, on the Q2 earnings call, uncharacteristically raised the long-term outlook for AWS, expecting its annual revenue to reach $1 trillion. Despite continuous improvements in AI fundamentals, the S&P 500 Information Technology sector's forward P/E ratio has fallen to approximately 20x, near a one-year low, placing it in the 1st percentile of its historical valuation range, indicating a divergence between upward revisions in earnings expectations and valuation compression. JPMorgan Chase believes that if valuations recover to historical averages, large-cap tech stocks (excluding semiconductors) could see a potential upside of approximately 56%.