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We recently published a list of Beyond the Tech Giants: 35 Non-Tech AI Opportunities. In this article, we are going to take a look at where Tenet Healthcare Corporation (NYSE:THC) stands against the other not-tech AI stocks.
Investors have been desperately searching for a safer way to play the AI boom that has swept the US stock market over the past few months. Prominent investment bank Goldman Sachs recently released an investor note detailing which sectors of the economy would benefit from the AI craze, replacing obvious bull cases in the technology domain by thoughtful insights on the long-term impact of AI on utilities, industrials, retail, and healthcare. According to analysts at Goldman, AI tools looked set to help companies outside of the technology sector improve productivity and reduce labor costs. The investment titan detailed the insatiable appetite for AI, evidenced by NVIDIA becoming one of the valuable firms in the world over the past year, and noted that the market was yet to reward companies that have downstream AI exposure.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and AI News You Should Not Have Missed.
David Kostin, the chief US equity strategist at Goldman, wrote in the investor note that the AI boom was likely to play out in four key phases. The first phase, per the analyst, had been focused on NVIDIA, the chipmaker that is at the forefront of AI data center build. Kostin detailed that the second phase was likely to be about companies building AI infrastructure. Some examples of this include semiconductor, data center, networking, cloud, and security industries, as well as utilities. So far this year, the returns of stocks working in these industries have dwarfed the returns of the benchmark indexes. The third phase, continued the analyst, would be about companies able to put AI in their products and boost sales in the process. Kostin cautioned that these firms had lost ground against AI stocks in recent months.
The analyst claimed that firms falling in the fourth phase of the AI boom, ones who would enjoy productivity gains after adopting AI, had been ignored by the majority of the market so far. Kostin maintained that it was unclear when these downstream AI stocks, some of which are discussed in detail below, would rally and expand their earnings multiples, but stressed that this would happen eventually. The industrial sector highlights the Goldman theory in action. Since the start of 2023, industrial stocks have jumped close to 30% in value. Of these, the firms that are directly exposed to AI verticals have more than doubled in value. In the fourth quarter of 2023, over 30% of industrial firms mentioned AI in their earnings reports, up from just 10% in the same period the preceding year.