This year, the artificial intelligence theme has driven nearly half of the MSCI All Country World Index’s (NASDAQ:ACWI) 11% return, according to a Citi Research report. Stocks with high AI exposure have benefited from rising valuations and earnings upgrades. What’s impressive is that the AI-driven stocks made up only 14% of the index.
High AI exposure stocks are up 36% year-to-date, while those with medium exposure have risen 9%. Nvidia (NVDA) leads the pack and has itself contributed nearly 3% to the index’s return, with other tech giants like Microsoft (MSFT), Alphabet (GOOGL), Meta (META), Amazon (AMZN), and Apple (AAPL) adding another 3% combined.
Analysts note that 22% of the 36% gain in high AI stocks is due to P/E re-rating, as investors believe these stocks deserve a premium valuation, with the remaining 14% coming from upward earnings revisions. Meanwhile, medium AI exposure and non-AI stocks have seen valuation gains, but their overall impact is smaller.
What Is the Best AI Stock to Buy?
Out of the top AI stocks, Wall Street analysts believe that NVDA stock is the best one to Buy. In fact, they expect the price to increase by more than 27% from current levels to $157.86 per share, as pictured below. Interestingly, professional money managers seem to disagree, as NVDA has a Negative Hedge Fund Signal. In fact, only GOOGL stock is favored by money managers.
