AI fears have put a lot of pressure on tech and AI stocks. But Jefferies sees this as a buying opportunity – especially with these stocks.
• AI fears depress tech and internet stocks
• Jefferies sees excessive valuation correction
• Expert explains: AI is developing into a long-term growth driver
The AI boom continues to cause massive shifts in the stock markets. While many investors recently took profits in fear of possible disintermediation through artificial intelligence, the investment bank Jefferies sees this as an opportunity.
From risk to tailwind? Jefferies sees exaggerated AI fears
According to an analysis by investment bank Jefferies, cited by investing.com, concerns about artificial intelligence have put significant pressure on valuations in the internet sector. As a result, Internet stocks have fallen by around 30 percent this year and are now trading at a “record discount of 30 percent compared to the S&P 500.” At the same time, the valuation multiples are “70 percent below their 2022 highs,” as the experts write according to investing.com.
However, analyst John Colantuoni sees this development as overly optimistic for bears. “Recent developments suggest that the internet is becoming an AI beneficiary, turning the recent sell-off into a buying opportunity,” it said.
Jefferies refers, among other things, to strategic adjustments by major tech players: OpenAI is partially withdrawing from strongly consumer-oriented product strategies, while Google continues to rely on its role as a traffic broker. For analysts, this is a signal that established Internet platforms could not be displaced, but could emerge stronger from the AI transformation.
Jefferies highlights these AI stocks
Jefferies is particularly specific when it comes to individual stocks. Expedia Group was upgraded to “Buy”. According to investing.com, the reason given is an “underestimated EPS algorithm”. The company is forecast to deliver earnings growth of more than 20 percent over three years, supported by strong growth in hotel bookings, increasing margins and share buybacks. Despite these prospects, the expected price-earnings ratio is around “40 percent below the Internet average.”
Jefferies also sees Instacart positively. The company has “underestimated growth drivers” and could achieve mid-double-digit profit growth over at least five years, investing.com also reports. The drivers are increasing transaction volume, new partnerships, corporate customers and international expansion. According to the analysis, the valuation is around 25 percent below the industry average – “close to an all-time low”, although growth is picking up again.
AI infrastructure remains a key issue – NVIDIA still in focus?
Jefferies’ classification underlines a broader picture: According to the experts, AI is not only a risk for existing business models, but is increasingly a growth driver for the entire digital ecosystem – from semiconductors to cloud providers to online platforms. Jefferies therefore does not see the current market weakness as a danger, but as an entry opportunity. Valuations are now excessively low, especially in the internet sector. At the same time, the AI topic – with NVIDIA as the central beneficiary – remains the structural growth driver that could create new winners on the markets in the long term.
Bettina Schneider, editorial team at finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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