Unlocking AI Investment Opportunities: Bank of America Reveals Top Taiwanese Stocks

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Bank of America Identifies Top Taiwanese Stocks for AI Investment

Artificial intelligence (AI) stocks have been gaining attention from analysts, with Bank of America (BofA) highlighting opportunities among “key AI suppliers” in a recent note. BofA remains optimistic about AI, despite concerns that the current boom may be short-lived, similar to the internet bubble of the 1990s and virtual reality in the 2020s. The bank believes that AI is different because the major players are global cloud service providers (CSPs) and enterprises, rather than start-ups focusing on the consumer market.

Investment in AI

Enterprises and global CSPs, such as Google, Amazon, and Microsoft, are investing heavily in AI to boost sales, improve efficiency, and develop new products. BofA predicts that AI investment will reach 4 billion this year, compared to 7 billion to 6 billion between 2021 and 2022. This significant investment will require a steady supply of AI servers, with many suppliers based in Taiwan.

Taiwan’s Role in AI

BofA emphasizes the importance of Taiwanese semiconductor and hardware suppliers in developing and testing new AI solutions. These suppliers play a crucial role in providing higher value-added products and have strong bargaining power. According to BofA, AI will contribute to increasing the gross profit, margins, and earnings of these companies.

Top Taiwanese Stocks for AI Investment

BofA has identified three Taiwanese stocks as top picks for investors looking to capitalize on the AI theme:

Lite-on Technology

Lite-on Technology is a consumer electronics company specializing in semiconductors, LEDs, and optical disc drives. BofA is optimistic about the stock due to rising AI server demand, an increasing sales mix from better-margin optoelectronics and cloud/AIoT business, a solid balance sheet, ongoing margin expansion, and consistent high cash dividend payout. Over the past year, Lite-on Technology’s shares have increased by approximately 86%. BofA rates the stock as a buy with a price target of 155 New Taiwan dollars, indicating a potential upside of around 35%.

Quanta Computer

Quanta Computer is a manufacturer of notebook computers and electronic hardware. BofA considers it a key beneficiary of the growing AI applications. The bank appreciates Quanta Computer’s superior product mix and continuous delivery in the server and electric vehicle (EV) business. Over the past year, shares in Quanta Computer have risen by over 200%, and BofA expects them to increase by another 40% in the next 12 months.

Wistron

Wistron is an electronics manufacturer that has also made BofA’s list of top AI stocks. The company’s inclusion is based on its double-digit sales growth and the compound annual growth rate of its earnings per share between 2023 and 2025. Wistron’s shares have surged by over 220% in the past year. BofA predicts that the stock price will reach 130 New Taiwan dollars within the next 12 months, offering a potential upside of nearly 40%.

In conclusion, Bank of America sees significant potential in Taiwanese stocks related to AI investment. Lite-on Technology, Quanta Computer, and Wistron are among the top picks for investors looking to capitalize on the current AI boom.