Morgan Stanley says it’s time to buy the dip in some beaten-down AI infrastructure stocks.
AI stocks across the board have had a tough stretch in recent week. Here’s the scoreboard on some major AI funds lately: the Global X Artificial Intelligence & Technology ETF (AIQ) is down 17% since June 2; the Roundhill Magnificent Seven ETF (MAGS) has dropped 10.8% since May 28, and the iShares Semiconductor ETF (SOXX) has fallen 21% since June 22.
But little has changed regarding the bullish drivers behind these trades, the bank said.
“We believe a meaningful driver of weakness has been technical rather than fundamental,” Stephen Byrd, an analyst at the bank, wrote in the note.
To play the recent dip, Morgan Stanley shared a basket of stocks it rates “overweight” across multiple AI themes. One major theme the bank likes within the broader AI trade is energy and energy storage, the latter of which analysts described as a “standout” sector of the market.
Buying the dip in AI power stocks has so far been an effective strategy, Morgan Stanley has found. Ramping up exposure after 5% and 15% declines has led to hypothetical returns of 175% since the start of 2023, compared to 100% for a portfolio that simply bought initially and held, the bank said.
Below, are 13 US energy stocks that fall under two themes: AI power infrastructure bottlenecks and energy security, as well as two names in energy storage.
Applied Digital
BI
Ticker: APLD
Trade: AI power infrastructure bottlenecks
Year-to-date return: -6.1%
Blackstone
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Ticker: BX
Trade: AI power infrastructure bottlenecks
Year-to-date return: -16.7%
Bloom Energy
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Ticker: BE
Trade: AI power infrastructure bottlenecks
Year-to-date return: 90.8%
Cipher Mining
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Ticker: CIFR
Trade: AI power infrastructure bottlenecks
Year-to-date return: 33.5%
Clearway Energy
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Ticker: CWEN
Trade: Energy security assets; energy storage
Year-to-date return: -5.48%
Liberty Energy
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Ticker: LBRT
Trade: Energy security assets
Year-to-date return: -10.8%
Riot Platforms
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Ticker: RIOT
Trade: AI power infrastructure bottlenecks
Year-to-date return: 55.1%
Solaris Energy Infrastructure
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Ticker: SEI
Trade: AI power infrastructure bottlenecks
Year-to-date return: 4.64%
SpaceX
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Ticker: SPCX
Trade: AI power infrastructure bottlenecks
Year-to-date return: -29.5%
Talen Energy
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Ticker: TLN
Trade: Energy security assets
Year-to-date return: -12.4%
TeraWulf
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Ticker: WULF
Trade: AI power infrastructure bottlenecks
Year-to-date return: 41.1%
Vistra
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Ticker: VST
Trade: Energy security assets; energy storage
Year-to-date return: -4.93%
X-Energy
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Ticker: XE
Trade: Energy security assets
Year-to-date return: -47.9%