Investors looking for opportunities in the stock market may want to consider diving into the world of artificial intelligence (AI). According to experts at Morgan Stanley, buying stocks with a rising exposure to AI could lead to outperformance later this year. The AI revolution has been a driving force behind the current bull market rally, with companies like Nvidia leading the way.
Morgan Stanley’s team of strategists identified a group of stocks where AI is playing an increasingly significant role in their business, which they referred to as “the enablers.” These stocks have shown strong performance, with “core-to-thesis” enablers returning more than 100% since January 2023. It is clear that the companies embracing AI technologies are reaping the benefits in terms of stock performance.
One company that made it onto Morgan Stanley’s list of AI enablers is First Solar, a solar technology company that has seen its shares soar 59% this year. Analysts remain mostly bullish on the stock, with buy ratings from both Morgan Stanley and Goldman Sachs. The potential for higher average selling prices and capacity expansion have caught the attention of investors, making First Solar an attractive AI play.
Another AI enabler highlighted by Morgan Stanley is Broadcom, a semiconductor manufacturer that has rallied more than 25% this year. Despite the stock’s strong performance, analysts continue to rate it as a buy, with potential upside of 10%. Bernstein Research named Broadcom one of its best ideas, emphasizing its position as one of the cheapest ‘AI play’ semis with a promising narrative for future growth.
Meta Platforms, the parent company of Facebook and Instagram, is also considered an AI enabler by Morgan Stanley. The stock has risen nearly 41% this year, with analysts bullish on its future prospects. While the consensus price target suggests only 3% upside, some analysts like Raymond James see the potential for double-digit gains. Meta’s leadership in GenAI building blocks is seen as a key driver of future growth.
As the AI revolution continues to reshape industries and drive innovation, investing in companies with a strong AI presence could prove to be a lucrative strategy for investors. The success of companies like Nvidia, First Solar, Broadcom, and Meta Platforms serves as a testament to the power of AI-driven innovation in driving stock performance.
Investors looking to capitalize on the AI revolution should consider building a portfolio of stocks with a rising exposure to artificial intelligence. Companies that are embracing AI technologies and leveraging them to drive growth are likely to outperform the market in the years to come. By identifying and investing in AI enablers, investors can position themselves for success in the evolving landscape of technology-driven investing.