Non-Technology Stocks with Long-Term Investment Potential

We recently made a list 35 Non-Tech Stocks with Long-Term Investment PotentialIn this article, we’ll take a look at where Costco Wholesale Corporation (NASDAQ:COST) stacks up against other AI stocks.

Investors have been desperately searching for a safer way to capitalize on the AI ​​boom that has gripped the U.S. stock market over the past few months. Prominent investment bank Goldman Sachs recently released a note to investors detailing which sectors of the economy would benefit from the AI ​​craze, replacing the obvious growth stories in tech with thoughtful insights into the long-term impact of AI on utilities, manufacturing, retail, and healthcare. AI tools appear to be helping companies outside the tech sector increase productivity and lower labor costs, according to Goldman analysts. The investment titan detailed the insatiable appetite for AI, as evidenced by NVIDIA becoming one of the world’s most valuable companies over the past year, and noted that the market has yet to reward companies with exposure to AI downstream.

For more information on these events, please access 30 Top AI Stocks According to BlackRock AND Artificial Intelligence News You Shouldn’t Miss.

David Kostin, chief U.S. equity strategist at Goldman, wrote in a note to investors that the AI ​​boom is likely to play out in four key phases. The first phase, according to the analyst, focused on chipmaker NVIDIA, which is at the forefront of building AI data centers. Kostin detailed that the second phase would likely involve companies building AI infrastructure. Some examples include semiconductors, data centers, networking, cloud and security, as well as utilities. So far this year, returns for stocks operating in these industries have dwarfed those of benchmark indexes. The third phase, the analyst continued, would involve companies that are able to embed AI into their products and boost sales in the process. Kostin warned that these companies have lost ground to AI stocks in recent months.

The analyst argued that companies entering the fourth phase of the AI ​​boom, those that would see productivity gains from AI adoption, have been largely ignored by the market so far. Kostin maintained that it’s unclear when these downstream AI stocks, some of which are discussed in detail below, will see growth and increase their earnings multiples, but he emphasized that it will happen eventually. The industrial sector underscores Goldman’s theory in action. Since the start of 2023, industrial stocks have risen nearly 30%. Of these, companies that are directly exposed to AI verticals have seen their value more than double. In the fourth quarter of 2023, more than 30% of industrial companies mentioned AI in their earnings reports, compared with just 10% during the same period the previous year.

The story continues

For more information on these events, please access The 33 Most Important AI Companies You Should Be Paying Attention To AND 20 Industrial Stocks Already Riding the AI ​​Wave.

Our methodology

For this article, we selected AI stocks outside the tech sector by consulting an investor note from the prominent investment firm Goldman Sachs. These stocks are also popular with hedge funds. Why are we interested in stocks that hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of top hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (more details here ).

omar-abascal-9Um7Huux0as-unsplash

Costco Wholesale Corporation (NASDAQ:COST)

Number of hedge fund owners: 71

Costco Wholesale Corporation (NASDAQ:COST) operates member warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, and Australia. Earlier this week, the company reported a more than 7% increase in monthly net sales, which reached more than $19.8 billion in August. This compares to $18.5 billion in net sales during the same month last year. The company’s total comparable sales in August were up 5%, while comparable U.S. sales were up 4.7%. For the first 52 weeks of the year, net sales totaled nearly $250 billion, up 5% from a year ago.

Costco Wholesale Corporation (NASDAQ:COST) is one of Wall Street’s favorite retail stocks. Morgan Stanley analyst Simeon Gutman recently raised his price target on the stock from $855 to $950 and maintained an Overweight rating, noting that the retail giant’s growth drivers were solid and that both its historical performance and overall view of the future of retail pointed to continued growth.

Overall, COST ranks No. 3 on our list of 35 non-tech stocks with long-term investment potential. While we recognize the potential of Costco Wholesale Corporation (NASDAQ:COST) as an investment, our belief is based on the belief that some AI stocks offer a better chance of achieving higher returns in a shorter time frame. If you are looking for an AI stock that is more promising than Costco Wholesale Corporation (NASDAQ:COST) but is trading at less than 5 times earnings, check out our report on cheapest AI action.

READ MORE: Michael Burry is selling these shares AND Jim Cramer recommends these stocks.

Disclosure: None. This article was originally published on The initiated monkey.