AI is more than just a technology story, investment is expected across sectors: BofA

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According to Bank of America’s head of U.S. equities and quantitative strategy, the AI theme is strong and “long tail,” not just technology.
Savita Subramanian told CNBC that companies in various industries will have to invest in AI “to survive.”
“I think AI is just part of a theme of efficiency, automation and ‘doing more with less’ that will be very bullish for corporate profits,” she said. Told.

While the frenzy of some artificial intelligence stocks this year has been irrational, the underlying AI theme itself is strong over the long term, and it’s not just a technical story, Bank of America said. Head of U.S. equities division, Dae Sun said. quantitative strategy.

Companies in various industries will need to invest in AI just to maintain their capabilities. So AI will be a broader subject than just a technology story, Savita Subramanian told CNBC on Tuesday.

“AI is complex, but it’s not just a technical story. That’s what makes AI interesting. The idea is to be able to,” she said.

“Companies will have to spend on AI to survive. Tech companies will spend on AI, old economy companies will spend on AI, and everyone will. So this is just one theme. market,” she added. . “AI is just one part of the theme of efficiencies, automation and ‘doing more with less’ and I think it will be very bullish for corporate profits.”

The benchmark S&P 500 stock index is up 14% so far in 2023, and the tech-heavy Nasdaq 100 is up 37%, even as many pundits warn of an impending recession.

Investor excitement over the rise of AI technology and expectations that the US Federal Reserve (Fed) will soon end its aggressive interest rate hikes are boosting the market.

“There’s a part of the S&P 500 that looks incredibly attractive, but what’s masked by the mega-cap stocks is that, excluding the top 50 stocks, the S&P 500 x 50 has a P/E of 15 times trailing earnings. , is actually relatively low,” Subramanian said. He said.

“There is a worthwhile opportunity, but this kind of AI bubble is making it more difficult to see right now,” she added.