"AI Stock Options for Investors from Citi"

Citi's Artificial Intelligence Stock Picks

Citigroup analysts suggest that investors should turn to less explored market areas to take advantage of the AI boom. Recently, concerns about a bubble related to AI technologies have caused divergences in technology sectors. In particular, November was turbulent for technology stocks, with the technology-heavy Nasdaq Composite lagging behind the S&P 500.

Risk Management and Stock Selection

Citigroup's U.S. equity strategy director Drew Pettit notes that the main issue in stock selection for artificial intelligence is not risk management. Pettit states, "There are winners and losers. You can see this in the Magnificent Seven and in the broader market. Therefore, it's important to focus on companies that achieve the best cash returns for their growth investments,"

High Valuation Pressures

Citi believes that current valuations do not yet reflect an AI bubble; however, the rapid rise in stock prices alongside the increase in valuations is putting pressure on companies. Pettit noted, "The main reason for the bursting of bubbles is often disappointing earnings. Under these conditions, as prices and valuations rise, it becomes increasingly important to adopt a growth-at-a-reasonable-price (GARP) approach in AI,"

Citi's Reasonably Priced AI Stock List

Citigroup has published a basket of stocks that offer opportunities in the AI sector from various industries to better manage risks for its clients. The "reasonably priced AI" stocks highlighted by Citi include:

• Dell Technologies (DELL)
• Uber Technologies (UBER)

Additionally, Citi is following Nvidia with a "BUY" rating and is optimistic about the partnership between Nvidia and Synopsys. It was noted that within this partnership, shares of Synopsys were acquired to accelerate computer and AI engineering solutions.

According to Citi, Eaton is another reasonably valued stock that stands out in AI. The market believes that the power management company's value is currently underestimated. Although Eaton shares have only gained 2% this year, Wall Street forecasts a 19% increase potential for the stock in the coming year.

All this information is not intended as investment advice, and we recommend careful evaluation.