Not all AI stocks are equally resilient: Morgan Stanley has selected 24 favorites

Wall Street professionals advise investors to be more selective when choosing stocks of companies involved in building AI infrastructure: investors are increasingly skeptical about how long the capital expenditure boom will last, according to Business Insider.

Morgan Stanley expects spending by cloud giants to slow: after doubling this year, spending will increase by only 60% next year and by just 14% in 2028. But analysts believe this will affect companies in the AI sector in different ways. The bank has compiled a list of players that are better positioned than others to weather the slowdown: they either have strong pricing power due to supply chain shortages or are capable of increasing their market share.

— Nvidia, a developer of chips for artificial intelligence (nearly 96% of Wall Street analysts recommend buying its stock)

— Dell Technologies, a manufacturer of servers and personal computers (67%)

— semiconductor manufacturer Advanced Micro Devices (79%)

— Broadcom, a developer of semiconductor solutions and infrastructure software (94.5%)

— Micron Technology, a manufacturer of memory chips (93%)

— SanDisk, a manufacturer of flash memory and storage devices (82%)

— Seagate Technology, a manufacturer of data storage devices and hard drives (83%)

— Western Digital , a manufacturer of data storage systems ( 72.4%)

— Hewlett-Packard Enterprise, a provider of corporate IT solutions and equipment (58%)

— Samsung Electronics, a technology giant that manufactures memory chips for electronics and AI ( 97%)

— SK Hynix, a manufacturer of semiconductors and memory chips (97%)

— Vertiv Holdings, a provider of data center infrastructure (83%)

— Caterpillar, a manufacturer of heavy machinery and equipment (56%)

— Cummins, a manufacturer of engines and power systems (65%)

— Epiroc , a manufacturer of mining and construction equipment ( 47.6%)

— Forgent Power Solutions, a provider of energy solutions (71%)

— GE Vernova, a power equipment manufacturer (75%)

— Innio, a manufacturer of gas piston plants and power plants (80%)

— Bloom Energy, a manufacturer of solid-oxide fuel cells (54.3%)

— Everpure , a manufacturer of water filtration systems ( 86%)

— Lumentum , a manufacturer of optical components and lasers ( 85%)

— Trane Technologies, a manufacturer of HVAC equipment and temperature control systems (64%)

— Johnson Controls International, a manufacturer of building management systems and industrial automation (54%)

— Hubbell, a manufacturer of electrical equipment and components (50%)

Morgan Stanley suggests that the growth in capital expenditures may slow less sharply than investors fear. Analysts noted that Wall Street has consistently underestimated the scale of computing capacity cycles—for example, the rollout of Internet infrastructure prior to 2000 and cloud infrastructure prior to 2020.

The bank also highlighted the significance of bottlenecks in supply chains: if capital expenditures exceed expectations, this could boost the profits of beneficiaries of the AI boom. “An acceleration in capital expenditures by cloud giants and neo-clouds compared to current levels, or a shift in priorities among existing players, could sharply increase pressure on certain links in the supply chain,” the analysts wrote.

This article was AI-translated and verified by a human editor