7 AI stocks for a boom that isn’t over: Jon Erlichman

Résumé détaillé

In 1998, economist Paul Krugman famously predicted the internet’s impact on the economy would be no greater than the fax machine’s.

In 1998, economist Paul Krugman famously predicted the internet’s impact on the economy would be no greater than the fax machine’s.

This week on Ticker Take, we spoke with Thorne, chief market strategist at Wellington-Altus. He called the rise of the internet early, and he says today we are nowhere near the end of the AI cycle. “We’re at the MS-DOS phase of AI,” he told us. Companies have barely started putting it to work, and the productivity gains are only beginning to show up.

Thorne expects the capex boom to run until 2031. That is when a U.S. tax break expires that lets companies write off the full cost of new equipment, like data centres and chips, in the year they buy it. Until then, he says, there is every incentive to keep spending. His advice is to ignore the doomers.

His framework is simple. He focuses on the highest quality leaders. Thorne believes the phase where beaten-down tech names went up 10 or 15 times on an AI story is over. Instead, he is looking for companies with a moat, open access to credit markets and real free cash flow. “Sometimes an apple is just an apple,” he told us. In other words, he suggests investors stop hunting for the next Nvidia and own the actual winners.

Thorne walked us through seven examples of leading AI companies he likes. As always, this is not financial advice.

Like many AI bulls, Thorne sees Nvidia as a core holding. The shares have had a huge run, but he says the part people are missing is its software moat. He is skeptical that other AI players are in a position to dethrone Nvidia, which leaves him optimistic about the long term. “You own it and you don’t sell it,” he told us.

Memory has been a bottleneck for AI, and Thorne sees Micron as a big beneficiary. The company has huge margins and monster growth, yet it trades at a steep discount to peers such as AMD. He compares the business to Apple, which traded cheaply for years until being re-rated by investors.

Thorne likes that Microsoft has a loyal enterprise customer base…

Début de l'article, extrait de BNN Bloomberg. Pour lire la suite, ouvrez l'article chez le média.