In One Chart: These stocks will benefit from AI — why they are better choices than the hottest picks, says Goldman Sachs

This post was originally published on this site

Stock investors should focus on companies that would benefit from adopting artificial intelligence in the long term, instead of the near-term beneficiaries, which have already seen significant appreciation in their share prices, according to Goldman Sachs. 

Near-term AI beneficiaries, including NVIDIA
NVDA,
-1.24%,
Meta
META,
+3.05%,
Amazon
AMZN,
+3.50%,
Salesforce
CRM,
+0.28%,
Marvell Technology
MRVL,
+0.76%,
Adobe
ADBE,
+0.68%,
Alphabet
GOOGL,
+0.39%,
ServiceNow
NOW,
+0.83%,
Microsoft Corporation
MSFT,
+0.99%,
Intuit
INTU,
-0.18%
and Credo Technology
CRDO,
-2.21%,
on average recorded a return of 66% so far this year, while the S&P 500
SPX
saw a year-to-date return of 15%, noted David J. Kostin, chief U.S. equity strategist at Goldman Sachs.

Some companies, which will benefit from AI in the long term, could get a boost in their earnings per share through higher sales and/or margins, Kostin wrote in a Sunday note.

Read this next: Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks

The Russell 1000
RUI
companies, or the top 1000 companies by market capitalization in the U.S., could see a median 19% increase in their earnings per share boosted by AI, according to Kostin. 

Kostin also listed 50 companies that could become long-term beneficiaries of AI in sectors that range from communication services to consumer discretionary to energy to financials to information technology. They are expected to see an increase in baseline earnings of up to 388% with a boost from AI. (See below)

Sector	Company name	Potential change to baseline earnings from AI (%)
Communication services	Pinterest, Inc.	162
	New York Times Company	67
	News Corp.	63
	ZoomInfo Technologies Inc	58
	Sector median	18
Consumer discretionary	H&R Block, Inc.	57
	Kohl’s Corp.	49
	Coupang, Inc.	49
	CarMax, Inc.	42
	Amazon.com, Inc	39
	Lear Corp.	30
	Sector median	19
Consumer staples	Walmart Inc.	44
	Walgreens Boots Alliance, Inc.	38
	Costco Wholesale Corp.	31
	Sector median	18
Energy	Occidental Petroleum Corp.	9
	Williams Companies, Inc	9
	Sector median	7
Financials	Kemper Corp	42
	Brown & Brown, Inc	40
	First American Financial Corp	38
	Willis Towers Watson	36
	Marsh & McLennan Companies, Inc	30
	Fidelity National Financial, Inc.	30
	Voya Financial, Inc.	30
	Sector Median	17
Health Care	Tenet Healthcare Corp	135
	DaVita Inc.	105
	Universal Health Services, Inc.	91
	IQVIA Holdings Inc	77
	R1 RCM Inc	77
	Encompass Health Corp.	68
	Illumina, Inc.	54
	Sector Median	20
Industrials	Clarivate PLC	232
	Robert Half Inc.	150
	Ceridian HCM Holding, Inc	125
	Tetra Tech, Inc.	122
	Science Applications International Corp	115
	Sector Median	25
Information Technology	Guidewire Software, Inc.	388
	Alteryx, Inc.	203
	MongoDB, Inc.	193
	Nutanix, Inc	177
	Smartsheet, Inc.	171
	Snowflake, Inc.	154
	Twilio, Inc.	138
	DXC Technology Co	95
	BILL Holdings, Inc	93
	HubSpot, Inc.	91
	Accenture Plc	80
	Elastic NV	76
	Cognizant Technology Solutions Corp	76
	Sector median	25
Materials	International Paper Company	41
	Sector median	17
Real Estate	Jones Lang LaSalle Incorporated	120
	Sector median	10
Utilities	Hawaiian Electric Industries, Inc	26
	Sector median	16
	List median	72
	Russell 1000 median	19
		Source: Goldman Sachs Global Investment Research