JPMorgan picks "undervalued" stocks for which AI is not a threat
One of the securities on the list has lost 30% of its value over the past month
JPMorgan believes that the shares of a number of companies have been overly affected by the sell-off driven by fears about AI / Photo: Shutterstock.com/4kclips
JPMorgan has compiled a list of stocks of companies whose business it considers protected from the threat of artificial intelligence. At the same time, these securities are also undervalued: they have suffered unfairly from the "soft apocalypse" along with those for whom AI really poses a threat, the bank believes. Earlier, a JPMorgan analyst compiled another list of protected stocks, calling February's selloff "disorderly."
Mispriced shares
JPMorgan compiled a selection of "mispriced" securities from various industries, which, according to the bank, the market has sold off excessively amid fears around AI, writes CNBC. Analysts of the bank emphasized the opportunity to buy on the decline in shares of fundamentally stable companies, noted Business Insider.
This list includes Affirm, a fintech company operating in the "buy now - pay later" segment. JPMorgan recommends buying its shares (Overweight rating), despite the fall of more than 30% over the past month. From a fundamental perspective, "the business is still performing strongly," the investment bank says. "The company continues to show premium gross merchandise growth (over 25%), stable credit quality, and operating profit margins are expanding (albeit from a low base)," CNBC quoted JPMorgan analyst Reginald Smith as saying.
The same list included used car seller Carvana, whose shares fell 14% in February. JPMorgan analyst Rajat Gupta believes that "Carvana's vertically integrated infrastructure and its competitive advantages create a 'last line of defense' against the negative impact of AI".
JPMorgan also included streaming platform Roku, audio service Spotify Technology and cybersecurity solutions provider CrowdStrike among the securities unfairly valued by the market, CNBC writes.
Business Insider writes that JPMorgan's list also included Shopify, Credo Technology Group, Equifax, Moody's, Okta, S&P Global and Block, among others.
Who is resilient to the AI threat among software developers
JPMorgan's note followed another list of stocks from the investment bank, in which the latter highlighted high-quality securities of software developers well positioned to successfully weather the upheaval caused by AI, writes Business Insider.
In that past note, the bank singled out 19 companies, Nai500 wrote. These were businesses with high customer attachment, significant cost of switching suppliers, and multi-year contracts that reduce the risk of sudden relationship breakdowns. In addition, these companies could benefit from AI-driven improvements in workflow efficiency.
JPMorgan noted that "extreme price dynamics" in the sector have created conditions for capital rotation back into software. The market is pricing in near-term downside risks from AI at levels that look "unrealistic," said Dubravco Lakos-Buyas, head of global markets strategy at JPMorgan, in a note to clients. "Given the clearing of positions, overly bearish expectations on the disruptive impact of AI on softs and resilient fundamentals, we believe the balance of risks is increasingly shifting towards a rebound," the analyst was quoted as saying by NAI500.
The bank then named software developer and cloud service owner Microsoft and cybersecurity solutions provider CrowdStrike among the most AI-resistant companies.
Also included on the list are:
- Provider of cloud-based business communications platform Twilio.
- Developer of Okta digital identity and access management solutions.
- Provider of the ServiceNow enterprise workflow automation platform.
- Developer of enterprise cybersecurity solutions Palo Alto Networks.
- Cloud cybersecurity provider Zscaler.
- Check Point Software Technologies, an Israeli developer of information security solutions.
- Cybersecurity company SentinelOne.
- Operator of Snowflake's cloud-based data storage and processing platform.
- Developer of the Datadog cloud infrastructure monitoring platform.
- Veeva Systems, a provider of cloud-based pharmaceutical software.
- Guidewire Software, a developer of solutions for insurance companies.
- Commercial real estate analytics provider CoStar Group.
- Government software developer Tyler Technologies.
- DevOps tools provider JFrog.
- Developer of SailPoint access control solutions.
- Netskope's cloud-based cybersecurity platform provider.
- Digital banking solutions provider Q2 Holdings.
This article was AI-translated and verified by a human editor
