Morgan Staley Lists GenAI By Investing.com “Underappreciated Growth Potential” Stocks

Investing.com — In a note to clients on Wednesday, Morgan Stanley identified stocks with “underappreciated growth potential” arising from the rapid development of generative AI (GenAI) infrastructure in the US.

According to their analysis, the expansion of the GenAI infrastructure presents several dynamics that investors have not yet fully priced in, creating opportunities in various industries.

Analysts highlighted several key trends, including the US data center capacity shortage, the growing carbon footprint of data centers, and potential funding opportunities related to the rise of GenAI.

Demand for data centers is expected to outstrip supply, particularly due to the volume of GenAI chips expected to hit the market by 2025.

“Our concern that a US data center shortage is evident from several data points,” the firm said, noting the mismatch in scale between their 2025 base case, which called for US data center new builds, and the volume of data centers under construction in the US. , with recent data suggesting extended interconnection timelines in key markets and “an increase in intensity in GenAI players’ efforts to secure access to energy.”

Some of the companies that could benefit from this trend include US nuclear power plant owners such as Constellation Energy ( CEG ), Vistra ( VST ) and Bloom Energy ( NYSE: ),” according to Morgan Stanley.

The bank also highlighted the carbon footprint associated with the growing data center industry, which will require decarbonisation solutions.

Morgan Stanley believes some of the companies positioned to capitalize on this need include AES Corp. (NYSE: ), NextEra Energy () and First Solar (NASDAQ: ), which are involved in clean energy and decarbonization efforts.

In addition, the bank highlighted a potential divergence in energy strategies for data centers, with some developers opting for natural gas power options.

Beneficiaries of this trend would be GE Vernova ( GEV ), Siemens Energy ( ENR ), and Mitsubishi Power, which provide energy solutions.

Overall, Morgan Stanley believes that these companies, among others, are well positioned to benefit from the rapid growth of GenAI infrastructure, and their growth potential remains underappreciated by the market.