Tech companies like Nvidia benefit from AI - but smaller stocks also offer favorable entry opportunities

Tech companies like Nvidia benefit from AI - but smaller stocks also offer favorable entry opportunities

According to a report by www.wallstreet-online.de, the increasing use of artificial intelligence (AI) worldwide has not only benefited large tech giants such as Microsoft and Nvidia, but also smaller, lesser-known companies that also benefit from AI technologies and offer cheaper entry opportunities. According to Dave Sekera, chief US market strategist at Morningstar, there is an opportunity to realize profits by selling overvalued tech stocks while also accounting for undervalued, smaller AI profiteers. These are viewed as “pearls” or “spin-offs” from the second tier and also offer disproportionate growth prospects.

The increasing demand for AI technologies has caused large technology companies such as Microsoft and Nvidia to increase in value and become correspondingly more expensive for investors. In this context, it is advisable to realize profits now with overvalued tech stocks and tend to underweight tech stocks. But there are still worthwhile investment opportunities outside of the best-known companies. Smaller, lesser-known AI beneficiaries with disproportionate growth prospects present themselves as attractive investment opportunities. This is of particular interest to long-term investors who want to capitalize on the future potential of AI technologies.

The recommendation to take profits on overvalued tech stocks and take into account the bias towards undervalued but promising AI beneficiaries can impact the market by causing investors to rebalance their portfolio. This could put pressure on the prices of overvalued tech stocks, while smaller AI profiteers become more attractive. For consumers, this potentially means broader access to innovation-driven AI products and services. There could be a shift in the industry towards lesser-known AI companies, which will thereby receive new growth impulses.