'Underappreciated beneficiaries' of AI: Morgan Stanley shares Asian names and gives one 113% upside
Many U.S. companies have caught the attention of investors amid the artificial intelligence boom, but there are "underappreciated beneficiaries" in Asia-Pacific, according to Morgan Stanley. It said Japan stands out, with 53% of companies seen as AI beneficiaries — nearly matching the United States' 54%, above Europe's 50% and Asia-Pacific ex-Japan's 39%. "Tightening labour markets and digitalisation policy initiatives make this an underappreciated opportunity, in our view," the bank said in a Feb. 8 report. Beneficiaries could be both AI adopters and enablers — or those that are a mix of both, according to Morgan Stanley. AI enablers facilitate the use of AI for other companies. The greatest share of AI beneficiaries in Asia and emerging markets were found in IT and communications, it said. "Financials were also seen as well advanced in AI adoption plans, with a view to benefits materialising over the next 12-24 months for over half of constituents," it said, adding that health care and health tech could also be beneficiaries. At the opposite end of the spectrum, sectors Morgan Stanley said had "unknown" AI impact included real estate, materials and energy. The utilities sector largely fits that bill but, it noted, may benefit from a rapid growth in electricity demand to power AI servers and computing. AI enablers have been the strongest performers in all regions, though companies in Asia-Pacific lagged their peers in Japan and the United States, according to the bank. Here are some names in Morgan Stanley's screens of AI beneficiaries — enablers, adopters and those that are both — that it says have the "most potential for outperformance over the next 12 months."