2 Top value investors say AI beneficiaries haven’t caught up yet | Wilnesh News
Aaron Dunn says artificial intelligence-related stocks have been the clear leaders of this bull market rally, but there may still be some potential beneficiaries who haven’t caught on to the trend yet. While some investors have expressed concerns about lofty valuations, Dunn, co-head of value equity at Morgan Stanley Investment Management and portfolio manager on Eaton Vance’s value team, told CNBC in a recent interview that he has been paying attention Micron Technology and Accenture. Both stocks represent businesses with good returns, he said. Micron Technology benefits from consolidation in its memory business, while Accenture Capital is smaller. Accenture has already profited, and Micron Technology is not far behind. Dunn believes semiconductor maker Micron could benefit as demand for memory chips begins to outpace supply again. “For artificial intelligence, you need more memory,” he said. “I think we will return to a period of tight memory, and Micron has very good new technology that will also absorb excess capacity.” In February this year, the company announced that it had begun production of HBM3E (high-bandwidth memory wafers). Dunn said the chips’ AI capabilities are comparable to Nvidia’s graphics processing units, while requiring less power and running at higher speeds. At the same time, Micron may also be a beneficiary of the United States’ desire to have more domestic business in the semiconductor chip market. “Effectively, the U.S. government will pay the University of Missouri to build domestic capabilities,” Dunn said. Micron Technology’s shares have risen 9% so far this year, while Nvidia’s shares have risen 77% during the same period. The portfolio manager warned that while Micron Technology shares have risen sharply – up 77% since hitting a 52-week low in March last year – and may be at risk of a modest pullback, the stock’s long-term fundamentals look very strong . MU 6M mountain MU 6-month chart Dunn also names professional services firm Accenture as a potential AI beneficiary. As of Friday’s close, the stock had gained 7% this year. Dunn said Accenture’s stock price could rise as companies begin to adopt artificial intelligence and large-scale language learning models in their business operations. “Businesses need help understanding how artificial intelligence will be used and ultimately how these technologies will be implemented,” he said. “Accenture is well-positioned to provide this. This could be a tipping point for them that will define medium-term trends for them.” ACN 6M mountain ACN 6-month chart Dunn’s fund, Eaton Vance’s Focused Value Opportunities Fund, has underperformed its benchmark Russell 1000 Value Index so far this year. Since 2014, the fund has outperformed its benchmark in five of the past nine years. The company has an expense ratio of 1.04%, and Morningstar has a Neutral rating due in part to its expense structure.