Artificial intelligence (AI) is rapidly transforming the financial industry, with more and more Wall Street firms investing in technology to stay competitive. According to a recent report by Baird, some companies are better positioned to benefit from this “tidal wave” of AI adoption than others.
ChatGPT’s debut sparked a flurry of discussion about AI, with Microsoft at the forefront due to its involvement with OpenAI and recent updates to Bing. The technology giant is investing heavily in this area and appears determined to remain ahead of the competition.
Baird has identified 50 stocks related to artificial intelligence and machine learning expected to take advantage of the ongoing AI craze. The note was sent out on Tuesday to clients as Microsoft is not the only organization that could receive an upsurge from this new “tidal wave” of investing.
Colin Sebastian, an analyst, pointed out that the stocks chosen have different growth, margin, and market capitalization profiles – rather than being connected to the excitement around generative AI and LLMs. Among them are two well-known companies: Apple and Nvidia.
Both companies have used AI and machine learning to advance their offerings for years. Altimeter’s Brad Gerstner recently informed CNBC of a new investment in Nvidia since it is indispensable for Artificial Intelligence.
Gerstner says:
“We’ve long admired Nvidia, its leader Jensen [Huang] and the central role that they play in AI.”
“Halftime Report.” “Over the course of the last two years, we’ve seen a massive acceleration, evidenced by OpenAI and the work that Microsoft is doing, what Google is doing, etc.”
Will Power, an analyst, pointed out that Apple has been a major proponent of AI advances for quite some time now, from Siri to crash detection to its Face ID technology. Furthermore, several software stocks, such as Palo Alto Networks, were mentioned as contenders.
Wednesday saw the stock surge by more than 11%, following management’s upgrade of its earnings outlook and the cybersecurity firm beating analysts’ estimates for the prior quarter. Baird’s target price puts a potential 32% upside on the stock from Tuesday’s closing figure.
Shrenik Kothari, an analyst, has highlighted CrowdStrike and Splunk as AI beneficiaries in terms of their use cases within cybersecurity/infrastructure software to boost overall cyber security posture. This is being done to enhance threat detection and response.
Adobe and Salesforce, two software stocks, were included in the list, and ADP, a payrolls-services company. Michael Bloom of CNBC contributed reporting on this.
The rise of artificial intelligence (AI) is transforming the financial industry, and companies that invest in the technology are likely to reap the benefits. The recent report by Baird has identified some companies well-positioned to benefit from the AI “tidal wave” overtaking Wall Street. These companies can improve their efficiency, accuracy, and profitability by utilizing AI for financial analysis, trading, and risk management.
However, as with any disruptive technology, there are also challenges associated with AI adoption, including data privacy and ethical concerns. Nevertheless, it is clear that AI is set to play a major role in shaping the future of finance, and those who embrace it stand to gain a significant advantage in the competitive world of Wall Street.
Source: CNBC
