2 under-the-radar ASX AI shares that look set to jump

One broker says AI could unlock serious potential for these surprising companies.

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.

A couple hang off their car looking at the sun rising over the horizon.

Image source: Getty Images

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.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia, Temple & Webster Group, and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Nvidia and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Broker Notes

Buy, hold, sell: Cleanaway Waste Management, New Hope Corporation, CSL shares

Let's check out some new ratings on ASX shares today.

Read more »

Three different hands against a blue backdrop signal thumbs up, indicating share price rise on the ASX market
Broker Notes

3 ASX 200 shares to buy and why: Ord Minnett

The top broker explains its buy recommendations on Fortescue, ARB, and Resmed shares.

Read more »

Piggybank with an army helmet and a drone next to it, symbolising a rising DroneShield share price.
Broker Notes

How high will DroneShield shares go? A broker weighs in

While volatile, the signs are good for this company, Canaccord Genuity says.

Read more »

Woman with her hands out to each side on a light blue background.
Broker Notes

Buy, hold, sell: Ramelius Resources, Medibank, Soul Patts shares

Let's take a look at some new ratings from the experts this week.

Read more »

Two colleagues looking at a graph and comparing share prices.
Broker Notes

Guess which ASX 200 share was just hit with a broker downgrade

Bell Potter has turned lukewarm on this popular stock.

Read more »

Young successful engineer, with blueprints, notepad, and digital tablet, observing the project implementation on construction site and in mine.
Broker Notes

This ASX uranium company is set to surge: Brokers

Despite a project delay this company's shares look cheap, brokers agree.

Read more »

A woman in a red dress holding up a red graph.
Broker Notes

3 ASX shares UBS has tipped to increase 44% to 76%

Three very different companies to choose from.

Read more »

A medical specialist holds a red heart connected via technology and artificial intelligence.
Broker Notes

Morgan Stanley just upgraded their CSL share price target

The blood products company is still looking like a good buy.

Read more »