Recently, enthusiasm for artificial intelligence (AI) investments has reignited, and market anxiety appears to have eased. Analysts at Goldman Sachs point out that in the next round of AI investments, investors should shift their focus from popular names like Nvidia and infrastructure companies to platform stocks that specialize in direct AI applications, such as Microsoft and Datadog.
In a report released on Thursday, Goldman Sachs analysts mentioned that they believe "platform" stocks will be the primary beneficiaries of the new wave of generative AI investments. These platforms not only effectively utilize AI infrastructure but also provide the foundational tools needed to build the next generation of applications. They mentioned companies like Microsoft, Datadog, MongoDB, Elastic, and Snowflake, believing these enterprises are well-positioned to launch AI-integrated applications.
Although many platform stocks have experienced significant declines this year due to weak short-term fundamentals, Goldman Sachs analysts note that their valuations are at historical lows and the correction trend is starting to stabilize, laying a good foundation for the resurgence of AI investments. Meanwhile, the market continues to focus on Nvidia and companies providing AI infrastructure, such as semiconductors, cloud service providers, and data center REITs. Analysts believe these stocks still have room to rise, but future gains will depend more on profitability rather than valuation.
Goldman Sachs analysts also point out that the growth in current AI spending is not as rapid as previously expected, which could lead to more moderate returns for "second-phase" AI infrastructure stocks. Generally, platform stocks stand out in this context because "third-phase" stocks, those that can monetize AI through software and IT services, still face uncertainties about the timing of AI monetization. And "fourth-phase" stocks, those with potential to benefit from widespread applications, may take several more years to see substantial returns.
After experiencing a reduction in capital inflows into AI stocks this summer, the market remains cautious about their performance. Previously, Nvidia's stock price hit a historic high in June before falling nearly 27%. However, in recent weeks, with expectations of a Fed rate cut and strong macroeconomic data, AI trading has begun to accelerate again.
Key Points:
🌟 Goldman Sachs recommends focusing on "platform" stocks like Microsoft and Datadog to capitalize on the next wave of AI investments.
📉 Despite short-term declines for some platform stocks, their historically low valuations offer opportunities for a rebound.
🔄 Investment returns for AI infrastructure companies may be limited by valuation, focusing on earnings growth is crucial.
