- AI is a strong, “long tail” theme, not just a technology story, says Bank of America’s head of U.S. equity and quantitative strategy.
- Companies across industries need to spend on AI “just to survive,” Savita Subramanian told CNBC.
- “I think AI is part of this whole stream of efficiency, automation, ‘doing more with less’ that’s going to be really bullish on corporate margins.
The panicked rally in some artificial intelligence-related stocks this year has been irrational, but the underlying AI theme itself is strong, long-term and not just a technology story, said Bank of America’s head of U.S. equity. Numerical method.
Companies across industries need to invest in AI to stay relevant — and that makes it a broader theme than the history of technology, Savita Subramanian told CNBC on Tuesday.
“AI is complex, but it’s not just the story of technology, which is what’s exciting about it. It’s an idea that companies haven’t adapted to for a long time and have the opportunity to be leaner and simpler,” she said.
“Companies have to spend on AI just to survive. Tech companies spend on AI, old economy companies spend on AI, it’s everyone. So it’s not just a one-theme market,” she added. . “I think AI is part of this whole stream of efficiency, automation, ‘doing more with less’ that’s going to be really bullish on corporate margins.
The benchmark S&P 500 share index is up 14 percent so far in 2023, while the tech-heavy Nasdaq 100 is up 37 percent, even as many experts warn of a looming recession.
The market is buoyed by investor excitement over the rise of AI technologies, and the Federal Reserve is expected to hold off on raising interest rates soon.
“There are parts of the S&P 500 that look incredibly attractive, and what’s hidden in the megacaps is that if you take out 50 large stocks, the S&P 500 x 50 PE returns 15 times, which is relatively low,” Suramanian said.
She added: “There are value opportunities but they are currently hidden in this kind of bubble.
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