Keeping an Eye on the AI Boom
Victoria Greene, the chief investment officer of G Squared Private Wealth, is closely monitoring the surge in artificial intelligence (AI). Greene believes that the gap between AI winners and losers will grow more pronounced this year. She predicts AI will transition from being a buzzword to a practical tool that companies use to boost profit margins and revenue. G Squared manages over $575 million in client assets, and Greene emphasises that companies will need to demonstrate that they are making money with AI, rather than just talking about its future potential.
Investment Strategy for AI
Despite the high valuations of AI-related stocks, Greene remains confident that the early stages of AI use will continue to drive growth for beneficiaries. However, she notes that the gains from AI will not be limited to technology stocks alone. Greene is particularly optimistic about the industrials sector as a long-term investment. She believes that the demand for more efficient power infrastructure will drive growth in various areas, from warehouses to transportation and power plants.
Top Picks in Industrials
Within the industrials sector, Greene highlights Quanta Services Inc, Eaton Corporation PLC, and Emerson Electric Co as some of her top investment choices. She contends that these companies will benefit from the ongoing need for upgraded and efficient power infrastructure, driven by the AI shift.
Challenges for Established Companies
On the other hand, Greene notes that not all companies will benefit from the AI boom. For instance, Tesla Inc initially experienced a boost from AI, but is now facing challenges. Additionally, Salesforce Inc recently saw a significant drop of 20% in a single day due to disappointing fiscal second-quarter guidance. Greene suggests that Salesforce’s struggles may indicate that older software firms are at risk of disruptions.
Outlook and Market Trends
As the AI landscape evolves, it is clear that some industries and companies stand to gain significantly, while others face potential hurdles. Investors like Greene are adjusting their strategies to navigate these changes, looking beyond just tech stocks to identify long-term opportunities in sectors such as industrials. With the growing importance of AI, companies must not only talk about future possibilities but also showcase tangible progress and financial gains.