Top Stocks To Play A.I.'s Breakout Trend, According To Bank Of America

Artificial intelligence has the potential to fundamentally change the way we live, just like the internet and smartphones did. And Bank of America has some advice for investors who want to take advantage of this emerging trend that is transforming the tech sector.

‍

Equity strategist Haim Israel wrote in a letter to clients on Tuesday that if data is the new oil, then AI is the new electricity and that the "iPhone moment" for AI has come.

‍

Similar to the internet in the 1990s, he stated, "AI is going towards mainstream use, and huge language models like ChatGPT finally enable us to fully leverage on the data revolution."

‍

Given this context, Bank of America highlighted 15 stocks in a separate note to clients on Tuesday that are expected to gain from AI tailwinds.

‍

The Wall Street bank believes that a number of semiconductor and software businesses are well-positioned to succeed, despite the fact that Big Tech equities have assumed center stage in the AI arms race.

‍

Alphabet, Microsoft, and Nvidia are the leaders in AI, but Bank of America also sees

as one of the principal winners from AI. The chip manufacturer has experience with AI thanks to its AI-focused graphics and machine learning chips.

‍

Artificial intelligence has reached a "inflection point," according to Nvidia CEO Jensen Huang, who also noted that management believes AI demand helped the company outperform expectations on its profits this month.

‍

The existence of the company's supercomputers, according to Bank of America analyst Vivek Arya, is one of its AI strengths. According to his predictions, Nvidia may generate $80 billion in revenue and more than $14 in earnings per share by 2027 thanks to the growth of AI.

‍

With its comprehensive stack of accelerated hardware, systems, software, and developers, Nvidia is well positioned to lead the emerging generative AI arms race among international cloud and business customers, the author said.

‍

Another company with promise in AI is Taiwan Semiconductor. According to analyst Brad Lin, the company is a "critical enabler" for AI, and its foundry division, which counts Nvidia among its major chip clients, serves as the foundation for bringing "chip-design into fruition."

‍

By the end of 2024, at least 44% of TSMC's revenue is expected to have some AI exposure, according to Lin, who also noted that the company is in a unique position to seize new commercial opportunities.

Bank of America anticipates Meta Platforms and Apple to gain in the Big Tech sector. Offerings like Face ID and fall detection have a variety of AI and machine learning features built in by Apple.

‍

Mark Zuckerberg, CEO of Meta Platforms, announced on Monday that the business will establish a new product division to concentrate on generative AI solutions for WhatsApp and Instagram.

‍

Also, analyst Justin Post noted the Facebook parent's significant investment in graphics processing units to construct an AI Supercomputer and its "discovery engine" screening pertinent content for Reels as examples of its latest AI endeavors.

‍

Post believes that expanding its AI capabilities across the board could benefit Meta Platforms' ad targeting, which accounts for the lion's share of the social media giant's income.

‍

According to him, Meta has the opportunity to generate better content and targeting skills than its competitors because of its sizable user base.

‍

Palantir is another potential AI winner on the business and governmental fronts.

‍

The software company should profit from rising defense budgets from both the United States and its allies as they focus on new technology to better defend against threats. Analyst Mariana Perez Mora referred to data as the "new bullets" that can help national security agencies better defend against threats.

‍

According to her, Palantir's "dominant position in the AI-powered software market, differentiated end-to-end and highly secure solutions, and first mover advantages support continued penetration in the expanding market of AI-powered data solutions across national security and federal civilian agencies as well as highly regulated corporations."

‍

The list from Bank of America also included Adobe and Baidu, which intends to introduce its own chatbot with artificial intelligence.

‍