Finding reasonably priced companies that are benefiting from artificial intelligence (AI) is difficult. Shares in technology heavyweights such as Microsoft (US:MSFT), and Alphabet (US:GOOG) have shot up in the past year. Meanwhile, semiconductor designers Nvidia (US:NVDA) and Advanced Micro Devices (US:AMD) that supply these companies with chips have seen their shares rise by 211 per cent and 120 per cent, respectively over the past 12 months.
Tip style
Value
Risk rating
Medium
Timescale
Long Term
Bull points
- AI tailwinds
- Strong cash flow
- Low valuation relative to peers
- Not very capital intensive
Bear points
- Low-margin legacy business
- Slow growth in recent years
Hype is all well and good, but for these valuations to stay elevated AI will have to be adopted by the wider corporate world – and corporations will need help. IT giant IBM (US:IBM), with its big consulting arm, could be key to facilitating the transition.