Evercore ISI Identifies 'AI Revolutionaries' as Long-Term Investment Opportunities

Evercore ISI, a prominent research firm, has pinpointed companies it calls "AI revolutionaries" within the Russell 1000 index, highlighting their significant growth potential in the rapidly expanding artificial intelligence market. Despite the current low adoption rate of under 5% among U.S. firms, Evercore ISI sees parallels between the AI revolution and transformative periods like the Internet boom and the electrification/mass production wave.

The research firm has identified companies such as Nvidia, Alphabet, Amazon, Meta, Salesforce, Uber, Goldman Sachs, Booking Holdings, and Five9 as firms well-positioned to benefit from the AI wave. These companies have demonstrated increasing mentions of AI, positive earnings revisions for 2024, and favorable price/earnings-to-growth (PEG) ratios. Evercore ISI recommends a strategic approach, combining direct investment and protective options strategies, to maneuver through the expected market volatility.

Why this matters: The identification of 'AI revolutionaries' by Evercore ISI emphasizes the growing importance and potential of artificial intelligence in driving future economic growth. As more companies adopt and invest in AI technologies, it could lead to significant shifts in various industries and the overall business landscape.

Analysts at Evercore ISI are closely monitoring the progress of these companies in the AI space. The focus on AI, cloud computing, and generative AI workloads highlights the sector's critical role in driving future growth. Evercore ISI analyst Amit Daryanani has placed IBM on the firm's Tactical Outperform list, expecting "moderate upside" to consensus estimates. IBM is seen benefiting from excitement around generative artificial intelligence, with its Watson platform and WatsonX product.

Analysts are tracking IBM's AI progress, with expectations that its AI bookings have increased from $400 million in Q4 2022 to over $500 million. However, some concerns have been raised about the impact of weaker IT consulting spending on IBM's growth. Overall, IBM stock has gained about 13% so far this year and is trading at its highest levels in over a decade, though it may need another positive performance to keep the rally going.

Key Takeaways

• Evercore ISI identifies 'AI revolutionaries' with high growth potential in Russell 1000.
• Companies like Nvidia, Alphabet, Amazon, Meta are well-positioned to benefit from AI wave.
• Evercore recommends strategic approach of direct investment and protective options.
• IBM seen benefiting from generative AI, with expectations of increased AI bookings.
• IBM stock has gained 13% YTD, trading at highest levels in over a decade.