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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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