JPMorgan’s Cost Pressures, EPAM’s AI Upside & Costco’s Margin Tightrope: What Investors Should Know

As an investment banking MD reviewing these three names, the Zacks reports offer differentiated strategic trajectories with overlapping themes of margin pressure, revenue growth driven by differentiated offerings, and exposure to macro risk.

JPMorgan Chase has reported strong results in Q3 2025, with total revenues up ~9–10.5% YoY to ~$46–47B, and markets revenues soaring ~25% (~$8.9B), while investment banking fees rose ~16% YoY (~$2.6B) [6],. However, NII growth was modest (~2–3% YoY), under pressure from interest rate environment and funding costs [6],[7]. JPM has updated its 2025 NII forecast to ~$95.8B, slightly above previous targets, indicating some optimism [7]. The major concern is expenses: in 2026 JPM expects total expenses to rise to ~$105B (~9% increase), driven by AI, expanded branch networks, marketing, advisor pay, etc. There’s also asset quality risk with credit provisions increasing YoY [2],[3].

EPAM Systems is riding the tailwinds of strong demand in digital transformation, AI, cloud, and enterprise modernization. It raised its earnings forecasts for 2025 for the third time, projecting adjusted EPS between ~$11.36–$11.44, up from earlier $10.96–$11.12, and revenue growth of ~14.8–15.2% YoY [4]. Q3 revenue beat consensus, reaching $1.39B vs $1.38B expected, and segment strength varied—financial services up ~34%, software & hi-tech ~21% etc. [4],. Risks include foreign exchange exposure and accelerating competition from peers in AI and cloud services.

Costco continues to deliver strong operational performance. October sales rose ~8.6% YoY to $21.75B, aided by comparable sales and solid member retention (~92.3% US & Canada, ~89.8% global) [3]. Kirkland Signature is a key lever for Costco’s margin expansion. Its sales are growing faster than Costco’s overall sales, lifting penetration 50 bps YoY. Local sourcing, especially for Kirkland Signature Ultra Clean products in APAC, led to ~40% price reduction for members, which helps both value proposition and cost structure [1],[5]. Analyst cost and revenue estimates point to ~8–11% EPS and sales growth YoY [4]. However, Costco trades at a premium valuation (forward P/E ~48–50×) and is exposed to input cost inflation, tariffs, and supply chain disruptions.

Strategic Implications & Comparisons

• All three companies are investing heavily: JPM in AI and infrastructure, EPAM in the technology stack alignment to customer demand, Costco in global sourcing and warehouse footprint. Returns on those investments (relative to cost escalation) will determine shareholder value.
• Margin pressures differ: JPM’s non-interest expenses are rising fast, EPAM must manage cost structure and FX headwinds, Costco’s margin story revolves around private label and supply chain efficiency.
• Valuations: EPAM is coming off a year-to-date decline, suggesting embedded expectations of operational risk; Costco’s premium reflects market confidence but could limit upside unless execution impresses; JPM’s strength in trading/IB could support valuation but expense growth might be the drag.
• Macroeconomic risks—interest rates, inflation, foreign exchange, and consumer sentiment—are pervasive and affect each differently (JPM sensitive to interest rates & credit, EPAM to enterprise IT budgets & FX, Costco to input costs & discretionary spending).

Open Questions

• Will JPMorgan’s expense growth translate into sufficient revenue growth in IB and markets to maintain earnings momentum?
• Can EPAM sustain margin expansion and revenue growth in light of competitive pressures and currency fluctuations?
• Is Costco’s premium valuation sustainable if input cost inflation returns or international micro-disruptions affect its sourcing strategy?
• How will macro policy (rates, trade, inflation) evolve in 2026, and what will be the flow-through for these companies?