Key
Points
There’s
a
whole
world
of
stocks
beyond
flashy
AI
names
such
as
Nvidia
for
investors
looking
to
ride
the
latest
tech
wave,
according
to
investment
firm
Fidelity
International
These
indirect
AI
plays
include
semiconductor
foundries,
packaging
technology
companies
and
memory
companies,
the
investment
firm
said
in
a
report
Wednesday.
“Rather
than
focusing
on
so-called
hot
AI
stocks
–
because
names
that
are
big
today
may
not
be
the
winners
of
tomorrow
–
investors
may
consider
the
many
indirect
beneficiaries,
or
diversified
businesses,
where
the
benefits
of
AI
may
not
be
immediately
obvious
to
investors,”
Fidelity
said
in
its
report.
It
highlighted
similarities
between
the
current
AI
hype
and
the
“internet
era”
before
the
dot-com
bubble
burst:
“Internet
stocks
were
the
‘hot
stocks’
back
then
and
while
there
were
some
successful
companies,
many
failed.
In
our
view,
AI
will
follow
a
similar
trend,”
said
Fidelity
analysts.
As
such,
it
encouraged
investors
to
look
further
afield
for
stocks
to
invest
in.
“These
include
semiconductor
foundries,
packaging
technology
companies
and
memory
companies.
Further
downstream,
data
centre
providers
and
even
utilities
providing
the
energy
to
power
these
data
centres
may
feel
a
tailwind,”
Fidelity
said.
The
AI
boom
that
started
with
the
launch
of
ChatGPT
in
November
2022
has
been
a
particular
boon
for
Nvidia
,
whose
graphics
processing
units
are
used
to
train
and
run
the
chatbot.
The
chip
designer’s
shares
have
skyrocketed
almost
280%
in
the
past
year.
However,
looking
beyond
Nvidia,
stocks
in
the
AI-related
sectors
outlined
by
Fidelity
have
also
been
on
the
up.
Stock
of
Taiwan
Semiconductor
Manufacturing
Company
,
the
world’s
largest
contract
foundry
and
Nvidia
supplier,
are
up
over
50%
in
the
past
year.
Meanwhile,
South
Korean
memory
chip
giants
Samsung
and
SK
Hynix
have
surged
over
25%
and
around
100%,
respectively.
Memory
chips
are
required
to
train
large
language
models
such
as
ChatGPT
to
process
vast
quantities
of
data
and
generate
humanlike
responses
to
users’
prompts.
Other
indirect
beneficiaries
such
as
AI
server
and
chip
equipment
suppliers
have
also
seen
significant
gains.
Shares
of
Nasdaq-listed
Super
Micro
Computer
,
a
supplier
of
high-end
AI
servers
for
data
centers,
have
soared
around
1,175%,
and
those
of
Dutch
chip
equipment
manufacturer
ASML
,
which
supplies
TSMC
with
lithography
machines
critical
for
making
chips,
have
surged
53%
in
the
past
year.
Fidelity
also
said
it
was
worth
considering
software
and
services
companies.
“Unlike
consumers
who
can
adopt
new
technology
very
quickly,
adoption
among
businesses
is
much
slower.
This
is
where
these
companies
can
help,
in
areas
such
data,
integration
and
governance
services,”
the
report
said.
Customer
services
firms,
business
process
outsourcing
and
music
content
companies
could
also
offer
opportunities,
said
Fidelity,
as
they
“embrace
and
adapt
to
AI.”
“Digitization
leaders
and
enablers
in
the
manufacturing,
industrial
and
construction
sectors,
where
technology
is
still
very
under-penetrated,
are
looking
interesting,”
the
report
said.
“We
also
believe
design
software
companies
have
a
significant
role
to
play
in
the
long
term.”
