We recently compiled a list of the Morgan Stanley’s 15 Best European AI Stocks. In this article, we are going to take a look at where EDP, S.A. (OTC:ELCPF) stands against Morgan Stanley’s other European AI stocks.
In August last year, investment bank Morgan Stanley released an investor note highlighting that even though the chaos around prominent AI firms had somewhat subsided, an AI rumbling in Europe was just about to begin. Analysts at the investment firm compared the AI buzz to historical similarities in the mid-1990s, just before the internet craze. According to Morgan Stanley analysts, European semi stocks were experiencing a tactical correction and would hit new highs in the coming months. The note further detailed that a basket of these equities, handpicked by these experts, and nicknamed AI winners, had returned close to 45% on average since January 2023, the beginning of the AI revolution. These firms had outperformed the 14% jump recorded by the MSCI Europe benchmark, per the research.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
In the months since, European AI stocks have experienced significant volatility, most recently influenced by global developments and investor sentiment. A notable event was the introduction of a low-cost AI model by Chinese startup DeepSeek, which raised concerns about the profitability of existing AI companies that rely on expensive chips and infrastructure. This led to a sharp decline in European tech stocks, with the European tech index dropping 5.8%, marking the worst decline since October 2024. However, the market showed resilience shortly after. European shares reached a record high, driven by gains in retail and utilities stocks as tensions in the tech sector subsided. European stock pickers are exploring established sectors such as utilities, professional data providers, and even copper miners to tap into the next wave of AI advancements. This approach reflects a strategic shift towards industries that can support and benefit from AI infrastructure and applications.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
For this article, we selected companies based in Europe that have been benefiting from the AI boom. An important investor note by investment bank Morgan Stanley on European AI stocks formed the basis for this list. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An overhead view of a powerful electricity transmission tower with in motion cables.
EDP, S.A. (OTC:ELCPF)
Number of Hedge Fund Holders: N/A
EDP, S.A. (OTC:ELCPF) engages in the generation, transmission, distribution, and supply of electricity in Europe, South America, North America, and internationally. It is based in Portugal. The firm has demonstrated a strong financial performance in recent periods, with a notable 14% increase in net consolidated profit for the first nine months of 2024, reaching €1.08 billion. A significant aspect of EDP’s strategy involves the integration of AI to enhance operational efficiency and support the global energy transition. Since 2019, EDP has identified 239 initiatives related to data analytics and AI, underscoring its commitment to technological innovation. These AI initiatives are designed to optimize various facets of EDP’s operations, including predictive maintenance, energy distribution, and customer engagement.
Overall ELCPF ranks 14th on our list of Morgan Stanley’s European AI stocks. While we acknowledge the potential of ELCPF as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than ELCPF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
