BlackRock: Tactically overweight on US stocks, preferring opportunities related to the artificial intelligence theme

Zhitong
2024.06.27 13:04
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BlackRock believes that tactically overweighting US stocks and favoring opportunities related to artificial intelligence in the next 6 to 12 months. They are optimistic about investment opportunities in the technology sector and healthcare industry, while also seeing benefits in the industrial sector from the infrastructure development of artificial intelligence and low-carbon transformation. BlackRock points out that many technology companies have strong profit performance and ample free cash flow to support the construction of artificial intelligence infrastructure. In addition, due to easing corporate cost pressures and nominal GDP growth, corporate profit margins have rebounded, and the strong performance of US technology stocks has expanded to other industries

According to the Zhitong Finance and Economics APP, BlackRock stated in a publication that the performance of US stocks focusing on the technology sector is driven by opportunities related to the artificial intelligence theme, rather than a market flaw. Looking at a 6 to 12-month horizon, tactically, they hold an overweight view on US stocks and prefer opportunities related to the artificial intelligence theme. As US stock earnings expand, they also see investment opportunities in the healthcare and industrial sectors.

Based on the strong profit performance of technology companies in their financial reports, BlackRock has less concern about valuation indicators. The free cash flow of these technology companies accounts for nearly twice the market's sales revenue share and has the highest profit margins in various industries. In addition, many top technology companies are profitable, cash-rich, and able to fund the construction of data centers and other artificial intelligence infrastructure. In recent weeks, with the decline in European stock markets, investors preferring high-quality individual stocks may flock to US stocks.

BlackRock points out that the strong profit performance of US technology stocks has expanded to other industries, with the best performers of the year up by 8%. Among the 11 industries in the S&P 500 index, 8 industries have higher profit margins in the first quarter of this year compared to the same period last year. This is due to the easing of corporate cost pressures, the rebound in corporate profit margins, and nominal GDP growth remaining above pre-pandemic levels, providing some support.

BlackRock is optimistic about investment opportunities in the healthcare sector, thanks to the profit recovery of relevant companies, the development of medical innovation, and the demand under the transformation of population structure. At the same time, they also see opportunities in the industrial sector, considering the sector's support for the construction of infrastructure for artificial intelligence and low-carbon transformation. Companies in various countries will relocate production bases closer to home, and the restructuring of supply chains due to geopolitical factors will also affect industrial stocks

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