Many are approaching AI as a winner-takes-all market dominated by a few trillion-dollar names.
However, others believe there’s room for more than just the Magnificent Seven in what’s being called potentially one of the “largest investment opportunities in human history.” In a recent interview with Business Insider, Evan Feagans, a portfolio manager at TCW Group, shared four under-the-radar investments in the AI space he likes — including an Nvidia competitor that nobody is talking about.
No Nvidia monopoly
With Big Tech — Nvidia in particular — generating massive amounts of buzz around AI, it’s easy to think that the current industry leaders will continue to reign supreme.
Banks such as UBS certainly believe so. In a recent note, Ulrike Hoffman-Biurchardi, UBS’s head CIO of global equities, predicted that the AI landscape would be “dominated by an oligopoly of vertically integrated ‘foundries’ and monolithic players” led by the largest tech firms.
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Feagans believes that this is hardly the case. The Magnificent Seven might be considered the “early winners,” according to Feagans, but there’s no shortage of investment opportunities across the AI technology spectrum.
This is especially true for the core technology necessary to create AI products, such as data centers
“I do think that Nvidia has a very strong lead in core computing power, in that aspect of the AI data center, but that’s not all of the AI data center,” Feagans said. “You still need networking, you still need memory, which should be companies like Micron, Samsung. You still need data to train it on.” With so many different inputs necessary to create an AI end product, investors overly focused on Nvidia are missing out on other AI opportunities.
To Feagans, it’s likely that the AI market may become concentrated among a few large companies down the road, but he believes that “we’re not even close to that yet…and it’s hard to even say who that would be right now.”
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The top underrated AI picks
Feagans shared his top picks for under-the-radar AI investments that he believes have been overlooked amid the Big Tech rally of the last year. These investments encompass all parts of the AI value chain, including core technologies, commercial use cases, and auxiliary products. They are all constituents of the TCW Artificial Intelligence ETF (AIFD). TCW Group manages $204 billion in assets.