- Artificial intelligence is developing rapidly, and creating plentiful investment opportunities in its wake.
- HSBC breaks down the areas to watch in the AI space, focusing not just on software, but also hardware on equipment.
The robot revolution is coming. The question for stock investors is — are you prepared?
After all, artificial intelligence (AI) will eventually decide life-shaping things like whether we're insurable or have medical coverage, while also hugely impacting transportation and resource infrastructure, says HSBC.
That development is likely to carry with it major money-making opportunities. The trick is figuring out which corporations stand to benefit most.
"Companies that are early adopters of AI into their business may benefit from the first-mover advantage, increased productivity, reduced costs and potentially greater market shares," a group of HSBC global equity strategists led by Ben Laidler wrote in a client note.
The firm notes that automation and AI are one of the most under-owned thematic plays. In other words, there's upside waiting for investors savvy enough to grab it.
The chart below shows just how many billions of dollars are set to be unlocked in the coming years — and highlights the specific areas that will generate that growth.
In order to help in the stock selection process, HSBC has identified three primary categories — areas that focus on the hardware components and technology needed to support AI. This is where the firm thinks there's ample opportunities — not necessarily just in software, but also in machinery and tools.
Here are the group (all rationale from HSBC):
- Sensors — The development of natural language processing and a range of new enhanced sensors.
- Semiconductors — The high performance logic chips that are needed to analyze the data.
- Infrastructure and communication — Datacenters will expand to process the data and next generation 5G will be used to receive and transmit data.
Unsurprisingly, HSBC's stock screen is dominated by US and Korean companies. Out of the companies selected by the firm, the following US-listed ones have market values of more than $25 billion:
- Nvidia
- Intel
- Honeywell
- IBM
- Alphabet
- Broadcom
- NXP Semiconductors
- Salesforce.com
- Qualcomm
- Tesla
- Emerson Electric
- Parker-Hannifin
- Rockwell Automation
- Fortive
In the end, if you're as bullish on AI as HSBC, you'd be well-served to check out the sectors and companies outlined above. Because according to them, the machines are growing stronger, and with that sort of growth comes incredible opportunity.
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