Investment bank JPMorgan has identified alternative beneficiaries of the surge in artificial intelligence (AI) infrastructure spending, aside from well-known players like Nvidia (NVDA), AMD (AMD), Dell (DELL), and Super Micro Computer (SMCI).
According to analyst Samik Chatterjee, contract manufacturers Flex (FLEX) and Jabil (JBL), along with optical networking gear maker Lumentum (LITE), are among the top contenders in this regard. Chatterjee noted in a client note that while these companies may not be pure AI plays, they offer more attractive valuation entry points compared to their counterparts.
Lumentum, for instance, stands to benefit from the increasing demand for its Cloud Light high-speed optical transceiver products from cloud service providers. Meanwhile, Flex and Jabil are expected to see growth in assembling data-center gear for cloud hyperscalers. Chatterjee highlighted that AI infrastructure products constitute approximately 10% of sales for both Flex and Jabil.Â
This chart shows AMD has the second-highest forward P/E among some of the most prominent AI firms, indicating its stock offers far less value than companies like Microsoft (NASDAQ: MSFT) and Intel (NASDAQ: INTC). Consequently, it could be worth considering alternative stocks while you wait for AMD’s shares to come down to a more attractive price point.
In the computer hardware and networking sector, JPMorgan also recognizes Arista Networks (ANET), Coherent (COHR), Dell, and Super Micro as prominent beneficiaries of the AI trend.
Since the onset of the generative AI frenzy sparked by ChatGPT in late 2022, AI stocks have been instrumental in driving the overall market higher.
Both Flex and Jabil are featured on the IBD Tech Leaders list, with Flex additionally earning a spot on the IBD Global Leaders list. This underscores their prominence and potential within the evolving landscape of AI-related investments.