Stock market

This FTSE 100 stock could benefit big from the AI ​​boom.

Image source: Getty Images.

Within FTSE 100, there are many companies that offer exposure to artificial intelligence (AI). such as from data companies RELX And London Stock Exchange Group Like an investment trust Scottish mortgagethere are many ways to display a theme.

Here, I’m going to highlight a less obvious Footsie play on artificial intelligence. I think this radar company could take a big advantage of the AI ​​revolution.

AI theme exposure

One thing we know about AI is that it requires a lot of computing power.

This means that the demand for high-power AI chips is likely to increase significantly in the coming years.

Now, one way to play this theme is to invest in chip companies. Nvidia (which I have already done).

However, another way is to invest in companies that are supporting chip makers. Taiwan Semiconductor And Samsung Build new manufacturing plants to meet higher levels of demand.

This is where the FTSE 100 company is. Ash Ted (LSE: AHT) comes.

A game of picks and shovels

Ashtead is one of the world’s largest construction equipment rental companies.

Operating in the US, Canada, and the UK, it has more than 1 million rental assets on its books – equipment that lifts, powers, moves, digs, drills, supports, scrubs, pumps and Can be used to do a lot more.

What I like about it from an investment perspective is that it generates most of its revenue in the US today.

That means it’s really well-positioned to take advantage of the chip manufacturing boom, as the U.S. government is spending billions to expand manufacturing in the country.

Ultimately, this is a ‘picks and shovels’ play on an AI theme (quite literally).

The share price is rising.

I think investors are already starting to catch on.

In the past month, Ashtead’s share price has risen nearly 14%.

This may have to do with the fact that Taiwan Semiconductor was just given $6.6 billion by the US government to ramp up production at a chip manufacturing plant it plans to build in Arizona.

Or, it could have to do with the fact that Samsung is about to receive more than $6 billion in U.S. chip subsidies to expand its chip-making facilities in Texas.

I believe there is much more to come from this stock.

Year to date, shares in US rivals United Rent About 20 percent are up. Despite this, Ashtead’s shares are up just 6%. So, I think something has to be done.

As for the P/E ratio, it’s a little under 18, which isn’t particularly high.

This is worth noting by analysts, however, earlier this year JP Morgan Raised its price target for Ashtead to 6,800p. This is about 18% higher than the current share price.

New all-time highs on the way?

Now, I must point out that Ashtead operates in a cyclical industry.

So while there is a long-term growth story here, we could see industry turbulence in the short term, especially if economic conditions are weak.

However, I am quite excited by the potential.

Given the backdrop, I think it’s only a matter of time until Ashtead shares hit new all-time highs.

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button