Evercore: Buy these 26 stocks positioned for outperformance as they unlock the power of AI

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Generative AI provides plenty of opportunities for well-positioned stocks. BlackJack3D/Getty Images AI stocks are still a hot topic, but there’s plenty of companies that are all talk. Evercore’s Julian Emanuel searched out the stocks best utilizing generative AI. Financials and consumer-facing companies led the bunch as they cut costs and increased brand loyalty. Where were you on May 25, 2023?

It may seem like an innocuous date, but according to Evercore managing director Julian Emanuel, on that day everything changed.

That was the day after Nvidia’s first-quarter earnings announcement, in which the company declared it expected sales to skyrocket all the way to $11 billion in the coming quarter thanks to demand for the chips powering the artificial intelligence revolution.

Needless to say, investors took notice. On May 25, shares of Nvidia rose from $305 to a high of $385, and shares are still up 40% since that day. 

While it was a big day for Nvidia and its shareholders, what really happened on that date was the market realized that AI was here to stay — and that investing in the companies enabling and utilizing AI could be incredibly profitable. 

But which AI companies are strong picks? After all, in the months since Nvidia’s blockbuster announcement AI has been on everyone’s lips. According to a recent report by FactSet, the word “AI” was used in more earnings calls last quarter than ever before.

Evercore’s Emanuel dove into AI-related companies to separate those just paying lip service to the new technology, and those that can actually use it to boost their businesses. 

According to his analysis, while the “magnificent seven” are ahead of the game, plenty of other companies are catching up, and there are several industries where generative AI is already permeating.

“These include Financial companies which, with 43% exposure to Generative AI by virtue of an information driven, office oriented workforce, have Adopted AI because they understand the imperatives of the cost side of the equation as Ed Hyman’s forecast Recession remains in the 2024 foreground,” Emanuel wrote. “It also includes Consumer companies, with below economy wide average Generative AI exposure (around 28% vs. 32%) yet who are Adapting Generative AI to improve the client experience and build (repeat) loyalty through superior service.”

Evercore ISI Emanuel has high hopes for these “AI Enablers, Adopters, and Adapters,” as he calls them. But to find the best of the best, he searched across the Russell 3000 for companies with market caps of over $10 billion that have mentioned AI in their earnings calls since May 24. From there, he narrowed the list down to companies that enjoyed positive share price movement after their earnings calls since May 24, as well as stocks with next 12-month EPS revisions among the top 75% of the Russell 3000 since May 24. 

The 26 stocks below represent Emanuel’s top AI stock picks. Along with each company is its ticker, sector, market capitalization, estimated AI exposure, and Evercore analyst rating where applicable.

1. Alphabet

Google Finance Ticker: GOOGL

Sector: Communication Services

Market Cap: $1.67 trillion

Estimated AI Exposure: 44%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

2. Amazon

Google Finance Ticker: AMZN

Sector: Consumer Discretionary

Market Cap: $1.3 trillion

Estimated AI Exposure: 28%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

3. Nvidia

Google Finance Ticker: NVDA 

Sector: Information Technology

Market Cap: $1.04 trillion

Estimated AI Exposure: 34%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

5. JPMorgan Chase & Co.

Google Finance Ticker: JPM

Sector: Financials

Market Cap: $423.75 billion

Estimated AI Exposure: 42%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

6. Intel

Google Finance Ticker: INTC

Sector: Information Technology

Market Cap: $142.54 billion

Estimated AI Exposure: 34%

Evercore Analyst Rating: In Line

Source: Evercore ISI

7. Booking Holdings

Google Finance Ticker: BKNG

Sector: Consumer Discretionary

Market Cap: $109.91 billion

Estimated AI Exposure: 40%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

8. Lam Research Corporation

Google Finance Ticker: LRCX

Sector: Information Technology

Market Cap: $80.79 billion

Estimated AI Exposure: 30%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

9. Eaton Corporation

Google Finance Ticker: ETN

Sector: Industrials

Market Cap: $84.73 billion

Estimated AI Exposure: 29%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

10. KLA Corp.

Google Finance Ticker: KLAC

Sector: Information Technology

Market Cap: $61.23 billion

Estimated AI Exposure: 37%

Evercore Analyst Rating: In Line

Source: Evercore ISI

11. Marriott International

Google Finance Ticker: MAR

Sector: Consumer Discretionary

Market Cap: $57.54 billion

Estimated AI Exposure: 27%

Evercore Analyst Rating: In Line

Source: Evercore ISI

12. Emerson Electric

Google Finance Ticker: EMR

Sector: Industrials

Market Cap: $54.97 billion

Estimated AI Exposure: 37%

Evercore Analyst Rating: N/A

Source: Evercore ISI

13. Arista Networks

Google Finance Ticker: ANET

Sector: Information Technology

Market Cap: $55.42 billion

Estimated AI Exposure: 39%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

14. Trane Technologies

Google Finance Ticker: TT

Sector: Industrials

Market Cap: $45.34 billion

Estimated AI Exposure: 30%

Evercore Analyst Rating: N/A

Source: Evercore ISI

15. Lennar Corp.

Google Finance Ticker: LEN

Sector: Consumer Discretionary

Market Cap: $32.37 billion

Estimated AI Exposure: 29%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

16. Veeva Systems

Google Finance Ticker: VEEV

Sector: Healthcare

Market Cap: $32.23 billion

Estimated AI Exposure: 44%

Evercore Analyst Rating: In Line

Source: Evercore ISI

17. Align Technology

Google Finance Ticker: ALGN

Sector: Healthcare

Market Cap: $23.02 billion

Estimated AI Exposure: 31%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

18. T. Rowe Price Group

Google Finance Ticker: TROW

Sector: Financials

Market Cap: $23.31 billion

Estimated AI Exposure: 45%

Evercore Analyst Rating: In Line

Source: Evercore ISI

19. MongoDB

Google Finance Ticker: MDB

Sector: Information Technology

Market Cap: $23.35 billion

Estimated AI Exposure: 44%

Evercore Analyst Rating: N/A

Source: Evercore ISI

20. Fair Isaac Corp.

Google Finance Ticker: FICO

Sector: Information Technology

Market Cap: $21.79 billion

Estimated AI Exposure: 44%

Evercore Analyst Rating: N/A

Source: Evercore ISI

21. Zscaler

Google Finance Ticker: ZS 

Sector: Information Technology

Market Cap: $21.73 billion

Estimated AI Exposure: 44%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

22. Domino’s Pizza

Google Finance Ticker: DPZ

Sector: Consumer Discretionary

Market Cap: $13.39 billion

Estimated AI Exposure: 26%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

23. CarMax

Google Finance Ticker: KMX

Sector: Consumer Discretionary

Market Cap: $12.46 billion

Estimated AI Exposure: 29%

Evercore Analyst Rating: In Line

Source: Evercore ISI

24. Vertiv Holdings

Google Finance Ticker: VRT

Sector: Industrials

Market Cap: $13.60 billion

Estimated AI Exposure: 

Evercore Analyst Rating: 

Source: Evercore ISI

25. Pure Storage

Google Finance Ticker: PSTG

Sector: Information Technology

Market Cap: $10.36 billion

Estimated AI Exposure: 39%

Evercore Analyst Rating: Outperform

Source: Evercore ISI

26. Emcor Group

Google Finance Ticker: EME

Sector: Industrials

Market Cap: $9.87 billion

Estimated AI Exposure: 27%

Evercore Analyst Rating: N/A

Source: Evercore ISI

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