The clamor for the next big winner in artificial intelligence is reaching an all-time high as money managers look beyond Nvidia Corp. for the next success story in emerging markets.
The excitement surrounding AI has led to a three-fold surge in Nvidia’s stocks, along with a 50% increase in a key index for semiconductor manufacturers in the past year. Goldman Sachs Group’s asset management arm hasn’t by shy about its hunt for a stake in the manufacturers of AI supply-chain components, while Morgan Stanley is going in on organizations using AI reshape business models outside of the tech sector.
“We see AI as a growth driver in emerging markets,” said Jitania Kandhari, deputy chief investment officer at Morgan Stanley Investment Management. “While we have previously invested in direct AI beneficiaries like semiconductors, going forward it will be key to look for companies in different industries that are adopting AI to enhance earnings.”
Despite soaring values in U.S. AI companies, emerging-market AI stocks are considered to be a better value. Nvidia might trade at 35 times its project earnings, but Asian AI orgs are going for between 12 and 19 times. Emerging markets also have higher potential for faster growth.
