Barclays spotlights 'immense' potential for AI, points to NVDA, MSFT as 'key names'
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Barclays described the potential economic impact for artificial intelligence as "immense." The financial institution noted that even as AI has popped tech valuations higher, the valuations of the main beneficiaries of AI are not extreme and that their earnings will grow into those multiples with time.
âWe believe that most of the near-term economic value attached to AI will accrue to a handful of key names in the foundational hardware segments of the AI value chain," the firm stated in a note to investors on Thursday.
The bank argued that Nvidia (NASDAQ:NVDA) is the best example of this, pointing to the chip maker's recent guidance, which the firm says indicates that it is capturing nearly all of the near-term AI economics at the component layer.
Additionally, Barclays said that Microsoft (NASDAQ:MSFT) is a comparable example at the cloud layer. However, it was added that MSFT expects AI to only represent a small 1% benefit to its Azure business in Q4.
"While the longer-term implications are less clear, we believe that innovation and adoption at the software level will ultimately benefit primarily tech and services-based businesses," Barclays added.
For a more diversified view on the artificial intelligence space, see below a handful of AI-focused exchange traded funds and how they have fared in 2023.

GX Robotics & Artificial Intelligence ETF (BOTZ) +40.2%.
GX Artificial Intelligence & Tech ETF (AIQ) +37.3%.
Robo Global Artificial Intelligence ETF (THNQ) +34.8%.
Artificial Intelligence and Robotics ETF (ROBT) +26%.
Roundhill Generative AI & Technology ETF (CHAT) +13.3% (Launched recently on May 18).

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