Artificial intelligence may be the answer to a slowing economy, according to Raymond James. The Wall Street firm said AI is potentially the next “productivity catalyst” for a lackluster macro backdrop and outlined its favorite stocks to play the trend. “Almost like magic, OpenAI commercializes ChatGPT, and investors find a magic elixir that will drive capital spending growth in the near term, and productivity growth in the long term,” said analyst Frank Louthan in a June note to clients. “As they say ‘Nature Abhors a Vacuum’ and generative AI stepped right into this void.” These are some of the AI-focused names Raymond James recommends betting on: Perhaps unsuprisingly, Microsoft made the list. The firm views AI as integral to Microsoft’s cloud strategy and a tool that can expand and build share in high-growth and profitable areas. Raymond James also highlighted Nvidia among its top plays. Shares of the chipmaker, viewed by Wall Street as a dominant beneficiary, surged triple digits in the first half to top a $1 trillion market capitalization. The semiconductor company, a maker of integral graphics processing units underpinning large language models, also got a boost from strong quarterly results and a blowout forecast fueled by AI demand. NVDA YTD mountain Nvidia shares in 2023 To be sure, the firm expects new contenders and makers of these necessary units to emerge overtime, with Advanced Micro Devices already positioning itself as one of the best situated alternatives. But Nvidia’s dominance may be difficult to top. “NVDA has clearly established itself as the dominant chip/systems supplier due to its performance advantage, software eco-system, and full-stack AI offerings,” Louthan wrote. “The company’s breadth and depth of AI capabilities will be hard to match, in our view.” Raymond James also highlighted data infrastructure stocks powering AI platforms as another growth-driver for businesses such as Arista Networks . In recent weeks, Wall Street analysts have come to view the company as the next big AI play as hyperscale’s and large technology companies build out the infrastructure to support stronger bandwidths and capacity. “We expect the switching opportunity grows from $2.5B this year with ~$500M from Ethernet switches approaching $7B by 2027 with $5B going to Ethernet,” Louthan wrote. Other top AI picks from Raymond James include Salesforce , Alphabet and American Tower Corporation . — CNBC’s Michael Bloom contributed reporting
