Morgan Stanley Research released a report titled "Thematic Investing: 15 Ways to Play Artificial Intelligence". The report was written by several equity strategists at Morgan Stanley, who explored the theme of technology diffusion from different angles and regions, especially the widespread application of artificial intelligence (AI).
The report mentioned that as the AI theme continues to expand, more developments are expected to be seen in the rest of 2024 and 2025. Several key sub-topics are also mentioned in the report, including smartphones and edge AI, data centers supporting general AI, and companies adopting AI.
The report offers some specific investment recommendations, focusing on three AI sub-themes that appear attractive in terms of growth and valuation, market performance, expected upside, investor positioning and concentration risk, and expansion of large and mid-sized companies:
Smartphones & Edge AI: The report mentioned that multiple companies discussed this opportunity at the conference. The trend of edge AI is growing, and PCs/workstations are seen as the enabler of this trend. Analysts believe that the smartphone supply chain is the most catalytic investment approach in the short term.
Powering GenAI & Data Centres: The report highlights the energy and efficiency requirements required for training and reasoning basic models. Data center energy use for AI is expected to rise from 1% to 4% of total electricity consumption by 2035. Analysts recommend that investors pay attention to data center facilities around the world and Europe to cope with the upcoming increase in chip energy intensity.
The Adopter Opportunity: The report notes that every company that spoke at the conference mentioned the company's focus on improving efficiency and productivity. Although most companies said they are still in the "experimental" stage, it is expected that marginal expansion of these companies will be meaningful with the help of improved customer support and the integration of GitHub into the R&D process. The report also provides a list of stocks of some specific companies, including their analyst ratings, market capitalization, year-to-date returns, latest prices, and upside/downside relative to target prices. This information is intended to help investors identify companies that analysts believe have positive exposure in their respective AI sub-themes. Investors should consider Morgan Stanley research as only one of many factors when making investment decisions and should consider it in conjunction with other investment tools and the advice of personal financial advisors. At the same time, the report also reminds potential conflicts of interest and recommends that investors consult the disclosure section at the end of the report for more information.
In addition, the report also includes some charts showing the growth and valuation comparison of different AI sub-themes, market performance, and Morgan Stanley's bull, benchmark, and bear market forecasts. Finally, the report also lists company stocks in multiple regions, including analyst ratings, market capitalization, year-to-date returns, latest prices, and target price upside/downside space. If you are interested in these, please leave a message to let me know and I will update more specific information.
