Looking to tap into the artificial intelligence (AI) revolution with some promising ASX shares? A recent report from Morgan Stanley reveals plenty of potential Aussie beneficiaries of the AI arms race.
And with US AI visionary NVIDIA Corporation (NASDAQ: NVDA) knocking it out of the park in Q1 2024 – growing profits 628% year over year – investors are starting a feeding frenzy for ASX AI shares.
Two surprising names that came up in Morgan Stanley's note were Temple & Webster Group Ltd (ASX: TPW) and WiseTech Global Ltd (ASX: WTC).
The report highlights these companies as beneficiaries of AI advancements, making them potentially intriguing investment options, in my opinion.
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Temple & Webster's AI advantage
Temple & Webster is an online furniture retailer. So you might wonder, how does this ASX AI share benefit from AI?
Morgan Stanley says the company leverages AI technology to understand its customers better.
"We think TPW understands a lot more about their customers and potential customers compared to store operators", the broker said in the Australian Financial Review.
It added that AI would disrupt "most areas" of the company, including customer care, operations, product development, tech, and back-office functions.
Unlike brick-and-mortar retailers, Temple & Webster could use AI to enhance customer experience and operational efficiency.
'Offline retailers' face high costs with store staff and leases, limiting their ability to leverage AI. How does AI bring your lease down, for example?
In contrast, Temple & Webster's online focus gives it a competitive edge, Morgan Stanley says.
WiseTech's AI-driven growth
WiseTech is a logistics platform investing heavily in AI investment. This ASX AI share utilises machine learning, big data, and automation extensively.
Morgan Stanley estimates that WiseTech has invested around $1 billion in software research and development over the past five years.
The research note also identifies WiseTech as a key player in the AI revolution within the logistics sector. For instance, AI will likely help WiseTech enhance its core international freight forwarding market.
"Harnessing AI will be key given the many complexities in the freight forwarding industry", Morgan Stanley said.
It also expands this footprint into secondary markets, such as warehousing, compliance, and customs.
The broker expects AI to "assist with [WiseTech's] sales, support and customer success automation and analytics…improve developer productivity and result in more rapid product iteration at the same level of headcount".
AI a future theme for ASX shares
AI is transforming industries by improving efficiency and opening new growth avenues.
Companies like Temple & Webster and WiseTech are two promising, under-the-radar ASX AI shares well-positioned to benefit from AI advancements. With AI driving growth and efficiency, these companies could deliver strong returns, in my opinion.
In the last 12 months, the Temple & Webster share price is up 108%, while WiseTech shares are trading 30% higher in that time.
