Key Point
- While AI stocks may be the hottest on the market right now, investors should also consider indirect investments, Fidelity said.
- For some stocks, “the benefits of AI may not be immediately apparent to investors,” the financial services firm said.
- These AI-related businesses include semiconductor foundries, packaging technology companies and memory companies, the investment firm said in a report Wednesday.
For investors looking to ride the latest technology wave, there’s a world of stocks beyond flashy AI stocks like Nvidia, according to investment firm Fidelity International. These indirect AI efforts include semiconductor foundries, packaging technology companies and memory companies, the investment firm said in an article. Wednesday’s report. “Instead of focusing on so-called hot AI stocks (because today’s big companies are not necessarily tomorrow’s winners), investors are focusing on the many indirect may consider multiple beneficiaries or diversified businesses,” Fidelity said in the report. The paper highlights similarities between the current AI hype and the “Internet Age” before the bursting of the dot-com bubble, noting that “back then, Internet stocks were the ‘hot stocks’ and some companies were successful. “But many companies failed. In our view, AI is here to stay.” It follows a similar trend,” Fidelity analysts said. That encouraged investors to look further afield for stocks. “These include semiconductor foundries, packaging technology companies, and memory companies. Further downstream, data center providers and even the utility companies that power these data centers may feel a tailwind.” Fidelity said. The AI boom that started with the launch of ChatGPT in November 2022 has been a particular boon for Nvidia, whose graphics processing units are used to train and run chatbots. The chip designer’s stock has soared nearly 280% over the past year. But looking beyond Nvidia, stocks in the AI-related sectors outlined by Fidelity are also rising. Shares in Taiwan Semiconductor Manufacturing Company, the world’s largest contract foundry and his Nvidia supplier, have risen more than 50% over the past year. Meanwhile, Korean memory chip giants Samsung and SK Hynix rose more than 25% and about 100%, respectively. Memory chips are needed to train large language models such as ChatGPT to process vast amounts of data and generate human-like responses to user prompts. Other indirect beneficiaries, such as suppliers of AI servers and chip equipment, have also benefited significantly. Shares of Nasdaq-listed Super Microcomputer, a supplier of high-end AI servers for data centers, soared about 1,175%, while shares of Dutch chip equipment maker ASML, which supplies his TSMC with lithography equipment essential for chip manufacturing, jumped about 1,175%. has skyrocketed. % over the past year. Fidelity also said software and services companies are worth considering. “Unlike consumers, who can adopt new technologies quickly, enterprise adoption is much slower. This is where these companies can help in areas such as data, integration, and governance services,” the report said. . Fidelity said customer service companies, business process outsourcing companies and music content companies could also offer opportunities as they “embrace and adapt to AI.” “Digitalization leaders and enablers in manufacturing, industrial and construction sectors, where technology penetration is still low, appear to be interested,” the report said. “We also believe that design software companies have an important role to play in the long term.”
