2 AI beneficiaries that haven't caught up yet, according to top value investor
Artificial intelligence-adjacent stocks have been the clear leaders of this bull rally, but there may still be some potential beneficiaries of the trend that haven't caught up yet, according to Aaron Dunn. While some investors have voiced their concerns over lofty valuations, Dunn, the co-head of value equity at Morgan Stanley Investment Management and a portfolio manager on the Eaton Vance Value team, told CNBC in a recent interview that he's been keeping an eye on Micron and Accenture . Both stocks represent businesses with good returns, he said. Micron benefits from the consolidation of the memory business, while Accenture is capital light. Accenture is profitable, while Micron is not too far behind. Dunn believes that semiconductor manufacturer Micron could benefit as demand for memory chips begins to outpace supply once again. "With AI, you need more memory," he said. "I think we're going to go back to a period where memory is tight, and Micron has really good new technology that's also going to soak up excess capacity." In February, the firm announced that it had started production of its HBM3E, or High Bandwidth Memory wafer. These chips would be comparable with Nvidia's graphic processing units for AI capabilities, while also requiring less power and acting at higher speeds, Dunn said. Meanwhile, Micron could also be a beneficiary of the U.S.'s desire to have more of a domestic presence in the semiconductor chip market. "Effectively, MU will be getting paid by the U.S. government to build in-country capacity," Dunn said. Shares of Micron have rallied 9% so far this year, but Nvidia has gained 77% over the same time period. The portfolio manger cautioned that while Micron shares have had a big runup — it's gained 77% since hitting a 52-week low last March — and may be at risk of a modest pullback, the stock's long-term fundamentals look to be very strong. MU 6M mountain MU 6-month chart Dunn also listed professional services firm Accenture as a potential AI beneficiary. Shares have added 7% so far this year, as of Friday's close. Accenture is likely to rally as firms begin to adopt AI and large language learning models into their business operations, Dunn said. "Businesses will need help in understanding how AI should be used and the eventual implementation of those technologies," he said. "Accenture is positioned to provide this. This is likely an inflection point for them that will define the intermediate trends for them." ACN 6M mountain ACN 6-month chart Dunn's fund, Eaton Vance's Focused Value Opportunities Fund , has underperformed its benchmark, the Russell 1000 Value Index , so far this year. Since 2014, the fund has outperformed its benchmark in five of the past nine years. It has an expense ratio of 1.04% and a neutral rating from Morningstar, which is partly attributed to its fee structure.