- Stocks linked to artificial intelligence has been the subject of a furious rally in 2023.
- Experts at BofA and UBS recently wrote about their approaches for investing in the theme.
- Tech analyst Dan Ives doubled his price target on AI pure play C3.AI, which has soared almost 150%.
One of the market’s splashiest artificial intelligence newcomers is here to stay, says Wedbush tech stock analyst Dan Ives.
On Friday Ives boosted his price target on AI software company C3.AI from $13 per share all the way to $24. Shares of the $3.2 billion company have risen 146% year-to-date.
“The company continues to experience increased demand for its AI solutions that are designed to increase a range of applications across industries fueling tailwinds in the market,” Ives wrote. “The company is starting to gain momentum in building significant enterprise opportunities in its pipeline with its suite of innovative enterprise AI solutions.”
Ives says that C3 has to prove it can sustain the success that earned it this much attention by showing that its monetization strategy works and achieving its goal of being cash positive and profitable (according to adjusted metrics) in 2024.
“We believe that the blueprint is there, but it’s all about execution to regain the Street’s confidence back heading into 2023,” he said. He maintained a “Neutral” rating on the stock.
The rise of AI stocks
Artificial intelligence isn’t a new concept, but in the last few months investors have become fascinated with the potential of AI, particularly with the advent of large-language models like ChatGPT and image-generating programs like DALL-E. They’ve bid AI-related stocks up dramatically this year due to the possibility that a new generation of AI will transform a number of industries, including healthcare, coding, data analytics, and customer service.
That’s enough to make AI a staple of long-term tech investing, according to Mark Haefele, chief investment officer for UBS Global Wealth Management.
“AI, along with big data and cybersecurity, forms what we call the ABCs of technology,” he wrote in a recent note to clients. “We believe these three major foundational technologies are at inflection points and should see faster adoption over the next few years as enterprises and governments increase their focus and investments in these areas.”
Haefele added that tech is in a “new innovation cycle,” and that will create some fascinating new opportunities for private equity firms that specialize in early-stage investments. Some of those may become available to qualified investors.
A team at Bank of America echoed Haefele’s bullish view in a recent note, citing an estimate by PricewaterhouseCoopers that AI could add $15.7 trillion to global GDP in 2030. A group led by Head of Europe-Middle East-Africa Equity Research Eric Lopez and equity strategists Haim Israel, Felix Tran, and Martyn Briggs pointed to 20 stocks that could profit from the possibilities of the technology.
The team’s favorites include giants like Alphabet and Microsoft, for their search engines and respective chatbot projects, as well as Apple, because it will continue to profit from its search and data licensing deal with Alphabet — and could explore new financial arrangements over time — and Meta for its large language model LLaMA,
Other top choices include chipmakers like Nvidia and TSMC as the “muscles of AI,” along with lesser-known names like Hoya, AlChip Technologies, Advantest, and Qi An Xin Technology.
Source: I N S I D E R
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