Artificial intelligence (AI) has been a game-changer for technology companies, but the benefits are not limited to this sector alone. Nancy Tengler, the CEO and CIO of Laffer Tengler Investments, suggests that a wide range of industries can reap the rewards of AI investments. While big-name tech companies like Nvidia and Meta Platforms have seen significant stock valuation increases due to AI prospects, Tengler emphasizes that traditional companies can also leverage AI to enhance their productivity and profitability.
Tengler’s investment strategy revolves around identifying “old economy companies” that embrace digital transformation and AI integration to drive growth. By adopting robotics and AI technologies, industrial and consumer discretionary firms have seen improvements in efficiency and profit margins. Companies like Emerson Electric, L3Harris Technologies, Visa, Walmart, and McDonald’s are touted as prime examples of entities benefiting from AI adoption. These companies, referred to as the “picks and shovels” of AI by Tengler, are expected to maintain robust growth and stock performance.
According to Tengler, the impact of generative AI surpasses that of the internet, as it has the potential to greatly enhance productivity and fuel growth in various sectors. Despite the promising outlook, Tengler cautions that there will always be challenges to navigate. However, she remains confident in the ability of her portfolios, consisting of old economy companies, to outperform benchmarks consistently. Tengler’s approach aims to capitalize on the growth opportunities presented by AI while mitigating risks associated with industry disruptions.
Industrial giants like Emerson Electric and L3Harris have embraced digitization and automation to streamline operations. Tengler’s firm has recently increased its holdings in both companies, reflecting a bullish stance on the industrial sector. Emerson Electric’s stock has outperformed the S&P 500, with Berenberg favoring it as a top pick and projecting further price appreciation. L3Harris, specializing in aerospace and defense, has inked lucrative AI contracts with government agencies, positioning itself for sustained growth.
Walmart, another key player in Tengler’s AI investment strategy, has leveraged AI to drive significant growth in its e-commerce segment. The retail giant’s adoption of robotics and generative AI has enhanced operational efficiency and boosted online sales. Walmart’s recent corporate actions, including a stock split and dividend increase, underscore the strength of its financial performance and growth trajectory. Tengler highlights Walmart as a prime example of a traditional company capitalizing on AI to remain competitive in the digital age.
In addition to traditional companies, Tengler’s investment approach includes tech titans like Broadcom, Amazon, and Microsoft, known for their AI capabilities. By striking a balance between growth opportunities and reasonable valuations, Tengler’s investment strategy encompasses a mix of companies poised to benefit from AI advancements. This diversified approach allows her to capture the full spectrum of AI-related opportunities across various industries.
As AI continues to disrupt and transform industries, forward-thinking companies that embrace digital innovation stand to reap substantial rewards. Nancy Tengler’s investment philosophy underscores the significance of incorporating AI into traditional business models to drive growth, enhance efficiency, and deliver value to shareholders. The evolution of AI presents a wealth of opportunities for companies willing to adapt and harness the power of cutting-edge technologies.