Citi
has
identified
several
undervalued
global
stocks
exposed
to
artificial
intelligence
that
present
substantial
investment
opportunities.
The
Wall
Street
bank
said
these
stocks
have
seen
improved
earnings
expectations
but
have
not
experienced
significant
increases
in
their
valuations,
making
them
attractive
for
investors
looking
to
capitalize
on
the
AI
trend
without
paying
premium
prices.
This
year,
the
global
equity
market
has
received
a
substantial
boost
from
AI-related
stocks.
AI
has
driven
approximately
half
the
11%
return
in
the
MSCI
All
Country
World
Index
so
far,
according
to
Citi.
That’s
despite
AI-exposed
stocks
accounting
for
only
14%
of
the
index’s
total
market
capitalization.
The
picture
resembles
the
S
&
P
500
,
where
mega-cap
stocks
focused
on
AI
have
driven
much
of
the
rally.
“This
cohort
of
stocks
has
generally
benefitted
from
rising
multiples
and
improving
2024
earnings
estimates,”
said
Citi
strategists
led
by
Drew
Pettit
and
Beata
Manthey.
While
many
AI
stocks
have
benefited
from
both
expanding
multiples
and
upward
earnings
revisions,
Citi
has
identified
a
subset
of
19
stocks
that
buck
this
trend.
The
bank
says
these
stocks
largely
have
“medium”
exposure
to
AI.
The
investment
bank’s
analysts
hiked
their
2024
earnings
estimates
for
these
stocks,
but
they
have
not
yet
experienced
significant
price-to-earnings
expansion.
Among
the
companies
highlighted
in
Citi’s
screen
are
well-known
names
such
as
Digital
Realty
Trust
,
Airbnb
,
and
Apple
.
The
research
note
points
out
that
“each
of
these
names
are
AI
laggards
year-to-date”
but
where
“returns
are
positive,
and
momentum
has
improved
of
late.”
Other
notable
companies
on
the
list
include
Toyota
Motor
,
Visa
,
ServiceNow
and
Samsung
Electronics
.
These
stocks
represent
various
sectors
and
geographies,
indicating
that
AI’s
impact
is
globally
widespread.
Citi’s
analysis
reveals
that
high
AI
exposure
stocks
have
seen
a
36%
return
year-to-date,
with
22%
driven
by
price-to-earnings
ratio
expansion
and
14%
by
upward
earnings
per
share
revisions.
This
dual
tailwind
of
improving
valuations
and
fundamentals
has
not
been
present
in
stocks
with
medium
or
low
AI
exposure
—
such
as
those
in
the
table
above.
—
CNBC’s
Michael
Bloom
contributed
reporting.
