Fidelity International: Technology stocks are fundamentally good and maintain a long-term positive view on AI-related industries.

2024-03-14 14:03

Zhitongcaijing
The rise of technology stocks driven by the concept of artificial intelligence stocks and the seven technology giants will continue from 2023 to 2024. The prospects of the industries these companies are in are attractive, with substantial profit growth supporting the continuous upward trend in stock prices.
On March 14, Marty Dropkin, director of stock investments in the Asia-Pacific region at Fidelity International, stated that the rise in technology stocks driven by artificial intelligence concept stocks and the seven tech giants will continue from 2023 to 2024. The prospects of the industries these companies are in are attractive, with substantial profit growth supporting the continued rise in stock prices. The positive momentum in stock prices also reinforces the market's confidence in the favorable fundamentals of technology stocks. Currently, AI technology applications are widespread, with many companies benefiting across various sectors, thus maintaining a long-term positive outlook on AI-related industries. Leaders and promoters in the digitization of manufacturing, industry, and construction industries, based on their currently low AI technology penetration rates, are slowly gaining attractiveness. Additionally, software design companies will play a significant role in the long-term development of AI.
The long-term structural growth factors of technology companies have not changed, considering the inseparable relationship between technological content and competitiveness, the structural growth potential of technology companies may be further enhanced by mastering AI technology. Any company in any industry needs to upgrade its computer systems to support the latest internet functions and protect company data. For investors who adhere strictly to investment discipline, there are numerous investment opportunities in technology stocks, with the key being to carefully select companies with sustained and robust growth prospects along with reasonable valuations.
Fidelity International stated that the market demand for graphic processors (GPUs) and AI applications remains strong, with demand higher compared to past capital spending cycles. From current to future substantial market demands such as technological applications, all drive the major trend of AI development. Among them, the emerging trend of large language models (LLMs) in computer calculations is one of the trends in AI development. LLMs allow computers to handle human language and abstract concepts expressed in language in a more realistic and human-like way, transforming these concepts into story creation, automatic programming, and even realistic movies.
Competition among major network platforms is fierce, as more and more tech giants plan to increase their investments in AI to avoid falling behind in the AI race, which makes other tech companies even more vigilant. Furthermore, the AI hardware and semiconductor markets, among other AI key components, are dominated by one or two suppliers, meaning these companies have bargaining power. The demand for AI components is outstripping supply, causing a rush among various sectors and further expanding demand.
Like with any new technological development, it is difficult to see the long-term development of AI in its early stages. Compared to the development of the internet, tech stocks were hot at that time, with some companies emerging successful as the internet technology matured, while many others failed. It is expected that AI concept stocks that are currently in the limelight will also follow a similar trend.
Considering that AI is still in a continuous development stage, it is currently difficult to determine who the winners are. Investors should not only focus on popular AI concept stocks but also pay attention to opportunities brought about by companies that benefit indirectly from AI development or diversified companies. The degree to which these companies currently benefit from AI development is not obvious, such as semiconductor factories, semiconductor process integration companies, and memory companies. Downstream, data center suppliers, and even utility companies providing power to data centers may also benefit from the development of AI.
Furthermore, the field of AI-related software and services is worth noting. While consumers can quickly adopt innovative technologies, businesses tend to adopt new technologies at a slower pace. AI software and service providers can assist companies in adopting AI technology in areas such as data, technology integration, and management services. Companies currently seen as losers in AI development are also another sector benefiting indirectly from AI development. When the market perceives that the prospects of these companies have been affected by the AI trend, some companies may embrace and adapt to the AI era, such as some customer service companies, business process outsourcing companies, and music providers.