20 Industrial Stocks Already Riding the AI Wave

5. Flex Ltd. (NASDAQ:FLEX)

Number of Hedge Fund Holders: 44

YTD Return as of August 1: 44%

Approximate Percentage Revenue from AI: 27%

Flex Ltd. (NASDAQ:FLEX) provides manufacturing solutions to various brands in Asia, the Americas, and Europe. The company is targeting the AI sector with an impressive 80% coverage for data center needs of large and hyper scale customers. It is also one of the few AI industrial stocks that have global coverage and exposure to automotive verticals. The data center and power revenues for the firm comprise over 25% of the overall revenue. A key competitive advantage that the firm has over peers is that it markets power pods for data centers that have a lower build cost and shorter lead times. This allows Flex customers to scale at a faster pace than their peers.

In the first quarter earnings call, Revathi Advaithi, the CEO of Flex Ltd. (NASDAQ:FLEX), remarked that there was strong demand for cloud solutions in the CEC business of the firm as AI helped drive a transition in data center development and working. She also added that this was helping the demand for power products made by the company. Per the CEO, this combined portfolio, from networking to power, positioned the business well for the AI driven technology transition happening from grid to chip and from the cloud to the edge.

In its Q1 2024 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Flex Ltd. (NASDAQ:FLEX) was one of them. Here is what the fund said:

“We initiated new GardenSM positions in Flex Ltd. (NASDAQ:FLEX), On Holding and Onto Innovation during the quarter. Flex provides outsourced electronic manufacturing services to a diverse set of end markets. The company hired a new CEO in 2020, who has been driving a strategic pivot toward manufacturing high-value products in areas such as health care, industrial, automotive and cloud infrastructure. Today, these higher value items account for ~60% of revenues, and we believe they will continue to tick higher. We also believe an improving business mix, along with the reshoring of supply chains, will lead to faster growth and higher margins.”