Forget the hype: Barclays identifies global 'A.I. winners' for the long term

Published Sun, Jul 9 202311:21 PM EDTUpdated Thu, Jul 13 20231:11 AM EDT

Barclays has named several global stocks that are expected to do well as the usage of artificial intelligence-related services evolves. The investment bank acknowledged that hardware and infrastructure giants, most notably Nvidia and Microsoft , are currently seeing the immediate benefits of the AI hype. Still, over the long term, it said businesses in the service sector could cash in significantly. The companies in Barclays' "Global AI Winners" basket include Canada-headquartered TELUS International and France's Capgemini . Shares of the two companies, which provide customer service, digital strategy, and consultancy services, are expected to rise by 67% and 31%, respectively, according to the consensus price target of analysts compiled by FactSet. "We believe that most of the near-term economic value attached to AI will accrue to a handful of key players in the foundational hardware segments of the AI value chain, whereas longer-term innovation and adoption at the software level should ultimately benefit primarily Tech and services-based businesses," Barclays analysts led by Emmanuel Cau said in a note to clients on June 22. Capgemini was also among the companies identified by Goldman Sachs earlier this month as stocks with the potential to be boosted by AI applications over the medium and long term. The below table highlights non-U.S. stocks in Barclays' basket of AI stocks. Japanese and Taiwanese companies dominate the list, with six stocks from each country. Companies in Taiwan included chip makers such as TSMC , Gigabyte , Global Unichip , and Alchip , whereas Japanese firms included high-tech component makers such as Lasertec and Tokyo Electron . Barclays also expects SoftBank Group to be a long-term beneficiary of A.I. thanks to the conglomerate's investments in many startups and technology firms. Barclays identified Germany's SAP and UK's Sage Group as potential long-term beneficiaries in Europe. The two companies have access to vast troves of data — critical for enabling AI — since they provide their customers with several customer support, HR, and accounting tools. Similarly, according to Barclays, Amsterdam-headquartered Adyen stands to benefit from increased A.I. adoption. The fintech and payment services company has previously admitted using AI to improve fraud detection and customer support. Dutch companies ASM and its former subsidiary ASML are also named net beneficiaries of the AI trend. The firms produce tools that enable the manufacture of high-tech semiconductor chips powering chatbots, such as ChatGPT.