Next AI winners are not your usual suspects
Analysts at investment bank UBS looked at how AI will impact certain sectors and which positioned to reap its rewards
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The rapid rise of generative artificial intelligence (AI) technologies is driving movement in financial markets and some companies that stand to benefit from it may not be the traditional tech names that typically come up in AI discussions.
An example of this can is the recent rise of Nvidia, which is the world’s most valuable chip maker and during Tuesday trading briefly joined the $1 trillion market capitalization club – a threshold only Apple, Amazon, Google and Microsoft have surpassed on Wall Street. Nvidia’s status as a leading producer of semiconductors plus hardware and software used to power supercomputers and machine learning models fueled its rapid rise despite not having the name recognition of the other big tech companies.
But it’s not just tech hardware and software firms that stand to benefit. A report by multinational investment bank UBS looked at the opportunities and threats AI creates for companies in a variety of industries and the firms that are positioned to take advantage of generative AI. It also analyzed the potential for AI to impact growth and costs, and whether it will either reduce or intensify the competitive landscape in a given sector.
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A report by UBS sheds light on some companies that aren't typically associated with AI but are nonetheless positioned to reap its rewards. (AP Photo/Mary Altaffer / AP Newsroom)
The UBS report was based on the findings of its teams of analysts who focus on 31 sectors and sub-sectors of the economy. They found that 18 sectors anticipate that generative AI will increase revenue, 17 believe it will drive increased competition, and all but one see it helping to save costs – with the internet sector the outlier.
Sectors in which UBS analysts see opportunities for both cost-savings and increased revenue without heightened competition risk include food retail, general retail, real estate, mining, capital goods, telecoms, semiconductors, tech hardware, medical devices and luxury goods. Here’s a look at some of the companies that UBS analysts believe are well-positioned to leverage AI in their respective sectors.
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McDonald’s, Chipotle Mexican Grill, Domino’s Pizza and Wendy’s were the four restaurant stocks that UBS views as favorably positioned for deploying generative AI. The report notes the "companies are using generative AI technology to cut labor costs, improve customer experience and drive sales," which will help "create long-term sales growth and improve profitability, solidifying key advantages."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| MCD | MCDONALD'S CORP. | 275.60 | -1.05 | -0.38% |
| CMG | CHIPOTLE MEXICAN GRILL INC. | 3,111.97 | +185.21 | +6.33% |
| DPZ | DOMINO'S PIZZA INC. | 494.77 | +7.06 | +1.45% |
| WEN | THE WENDY'S CO. | 19.82 | 0.00 | 0.00% |
Walmart was categorized as both a food and general retailer utilizing AI to boost productivity and improve its supply chain. Home Depot, Nike and Levi’s were listed as U.S.-headquartered general retailers that are positioned to leverage AI.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| WMT | WALMART INC. | 60.22 | +0.36 | +0.60% |
| HD | THE HOME DEPOT INC. | 331.94 | -0.94 | -0.28% |
| NKE | NIKE INC. | 93.94 | -0.70 | -0.74% |
| LEVI | LEVI STRAUSS & CO. | 21.09 | -0.48 | -2.23% |
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In the real estate sector, Equinix and Digital Realty were a pair of stocks UBS noted were, "Positioned to benefit from the growth of the AI industry – new AI companies, hyperscalers and traditional companies adding AI technologies."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| EQIX | EQUINIX INC. | 738.35 | -18.49 | -2.44% |
| DLR | DIGITAL REALTY TRUST INC. | 141.49 | +0.88 | +0.63% |
Halliburton and Schlumberger, which are both prominent players in the oil and gas industry, were early adopters of AI and offer a "wide range of AI-driven solutions" per UBS, while mining companies Anglo American, Rio Tinto and BHP Group are all investing in AI solutions.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| HAL | HALLIBURTON CO. | 38.72 | 0.00 | 0.00% |
| SLB | SLB NV | 49.44 | +0.33 | +0.67% |
| BHP | BHP GROUP LTD. | 57.21 | -2.03 | -3.43% |
| NGLOY | ANGLO AMERICAN PLC | 16.05 | +2.38 | +17.41% |
| RTNTF | RIO TINTO LTD. | 83 | -1.65 | -1.95% |
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HCA HealthCare, Guardant Health, Johnson & Johnson, Natera and UnitedHealth Group are the medical devices and services firms UBS found are utilizing AI and machine learning to boost their capabilities in both clinical and research settings.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| HCA | HCA HEALTHCARE INC. | 314.12 | -4.90 | -1.54% |
| GH | GUARDANT HEALTH INC. | 17.16 | -0.94 | -5.19% |
| JNJ | JOHNSON & JOHNSON | 146.83 | -1.72 | -1.16% |
| NTRA | NATERA INC | 91.28 | -0.22 | -0.24% |
| UNH | UNITEDHEALTH GROUP INC. | 494.01 | +6.57 | +1.35% |
Chipmakers AMD, Micron, Nvidia, Samsung, Hynix, TSMC, VAT Group, Inficon and Comet were all cited by UBS as being well-positioned to benefit from AI and all had 12-month "buy" ratings from UBS.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AMD | ADVANCED MICRO DEVICES INC. | 153.76 | +2.02 | +1.33% |
| MU | MICRON TECHNOLOGY INC. | 111.58 | -0.20 | -0.18% |
| NVDA | NVIDIA CORP. | 826.32 | +29.55 | +3.71% |
| TSM | TAIWAN SEMICONDUCTOR MANUFACTURING CO. LTD. | 136.57 | +3.58 | +2.69% |
| VACNY | VAT GROUP AG | 50.17 | -0.10 | -0.20% |