The US presidential election has made history, with Donald J. Trump becoming the next president. An uncontested election and a clear winner sparked widespread rallies on Wall Street yesterday, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite Index all hitting record levels, a rally that continued into Thursday. Companies on the front lines of artificial intelligence (AI) have made the biggest gains, as some on Wall Street believe the incoming administration’s policies could boost the AI revolution. Ta.
Against this background, chip foundry, Taiwan Semiconductor Manufacturing (NYSE:TSM)The stock, commonly referred to as TSMC, rose 4.4%. Social media and AI expert Metaplatform (NASDAQ:Meta) Increased by 3.4%. Broadcom, an AI chip specialist, and (NASDAQ:AVGO) It was up 2.6% as of 1:22 p.m. ET Thursday.
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After checking all the usual sources of information, including earnings results, analyst rating changes, and regulatory filings, we couldn’t find any company-specific news to drive AI stocks higher. This suggests investors are expecting further gains in AI stocks under the incoming Trump administration.
Image source: Getty Images.
Aside from the obvious euphoria of a non-contested election, there are other reasons why AI stocks have risen. Investors are also taking note, with multiple analysts writing messages suggesting AI could benefit from the next administration.
Wedbush analyst Dan Ives said he expects “a strong focus on AI from President Trump for major U.S. tech companies.” He also believes that “AI efforts are really starting to take off in the U.S.,” which will ultimately benefit the biggest companies in technology, especially AI.
He went on to note the potential for confusion at the Federal Trade Commission (FTC). FTC Commissioner Lina Khan has challenged many deals in the tech industry and waged antitrust battles with some of the industry’s biggest companies. Ives believes Khan could be replaced based on comments Trump made in the run-up to the election, which Ives believes would be a “huge plus” for big tech companies. There is.
Analysts at UBS echoed Ives’ view, suggesting that “AI spending by big tech companies should continue to support AI trade.” They go on to say that “AI adoption and monetization are accelerating further,” and that accelerating revenue growth and expanding profit margins among the world’s largest cloud infrastructure providers are evidenced by the growing adoption and monetization of AI. This is proof that our investments are bearing fruit.
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Generalities aside, there are specific reasons why our three AI stocks can continue to benefit from the paradigm shift represented by generative AI. These systems have the ability to automate time-consuming, mundane tasks, resulting in significant productivity gains. Each of these three individuals is an innovator in the field of AI.
Taiwan Semiconductor is the world’s largest chip foundry and a leading manufacturer of high-end semiconductors used in AI.
Meta Platforms leverages data from billions of users every day to power the development of Llama AI, one of the most widely used AI models.
Broadcom makes many of the chips and assistive technologies used in data centers and cloud computing, where much of the AI runs.
Generative AI is growing rapidly, with the market expected to be worth between $2.6 trillion and $4.4 trillion over the next few years, according to global management consulting firm McKinsey & Company. If these three AI players can seize even a fraction of that opportunity, there may well be blue skies ahead.
However, Broadcom, TSMC, and Meta are currently selling at 29x, 28x, and 26x forward earnings, respectively, making these companies’ stocks attractive.
I think each company is a buy, given the size of the opportunity and each company’s position in the broader AI ecosystem.
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Randi Zuckerberg is a former Facebook director of market development and spokesperson, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Danny Vena holds a position at Meta Platforms. The Motley Fool has exposure to and recommends Meta Platforms and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
“Why Taiwan Semiconductor, Metaplatform and other artificial intelligence (AI) stocks rose on Thursday” was originally published by The Motley Fool
