Artificial intelligence (AI) stands out as a clear and promising investment trend with long-term tailwinds, according to Wilson Asset Management Lead Portfolio Manager, Matthew Haupt.
Haupt runs the WAM Leaders (ASX: WLE) listed investment company (LIC). The investment strategy revolves around "picking inflection points and positioning the portfolio ahead of those changes".
Haupt has identified one ASX 200 telco stock and one ASX 200 energy stock that he thinks will do well in the rapidly growing AI era.
Which ASX 200 telco and energy stock?
Haupt says AI is a valuable productivity tool, particularly in sales operations.
As AI continues to influence hardware advancements, his team of analysts anticipate significant benefits for ASX 200 telco stock Telstra Group Ltd (ASX: TLS) and ASX 200 energy stock Santos Ltd (ASX: STO).
He says:
Investments in companies like Telstra and Santos offers investors an attractive opportunity to participate in the growth of AI, but at reasonable valuations and while benefiting from the certainty of established businesses.
Let's dig deeper.
Why Telstra?
Haupt says Telstra should be able to capitalise on the business sector's need for better and faster connectivity to enable their artificial intelligence systems and processes to run smoothly.
He explains:
Leading mobile communications provider Telstra commands 99% of data connectivity through its subsea cables and is expanding its infrastructure with fibre optic cables to enhance data transfer speeds and bandwidth.
With AI driving the need for faster and more robust connectivity, Telstra stands poised to capitalise on this, offering investors exposure to this trend.
The Telstra share price is $3.60 at the time of writing, up 0.14% for the day so far. The ASX 200 telco stock has lost 17% of its value over the past year.
According to CBA data, Telstra's price-to-earnings (P/E) ratio is 18.64x.
Why Santos?
Haupt says Santos is well-positioned to leverage the surge in electricity demand that will result from AI advancements.
He says:
Forecasts suggest electricity demand is set to double over the next decade – a demand Santos can meet with its low-cost energy solutions.
Renowned for being best in class, and boasting a motivated management team, Santos presents a compelling investment opportunity to capitalise on the evolving AI landscape.
The Santos share price is $7.46 at the time of writing, down 0.27% for the day so far. The ASX 200 energy stock has risen 2.2% over the past year.
According to CBA data, Santos shares are trading on a P/E of 12.04x.
Fellow Wilson Asset Management portfolio manager Oscar Oberg says AI will accelerate revenue growth and/or reduce operational costs for many companies.
He names 4 other ASX shares that are set to benefit directly from AI.
