We recently published a list of 35 Non-Tech AI Opportunities Amid DeepSeek Selloff. In this article, we are going to take a look at where Hawaiian Electric Industries, Inc. (NYSE:HE) stands against other non-tech AI opportunities amid DeepSeek selloff.
Investors are searching for safer ways to capitalize on the AI boom beyond traditional tech stocks. Towards the back end of last year, Goldman Sachs highlighted sectors such as utilities, industrials, retail, and healthcare as key beneficiaries of AI-driven productivity gains and cost reductions. While companies like NVIDIA have surged in value due to their role in AI hardware, Goldman analysts suggest the market has yet to fully recognize the potential of downstream AI-exposed industries. David Kostin, Goldman’s chief US equity strategist, outlines four phases of the AI boom. The first phase revolves around NVIDIA and AI chipmakers, while the second phase focuses on AI infrastructure, including semiconductor, data center, networking, cloud, and security firms. These stocks have significantly outperformed market benchmarks in 2024.
The third phase will involve companies integrating AI into their products to drive revenue growth. While these firms have lagged behind pure AI plays, their time is expected to come. The fourth phase includes businesses that will realize long-term productivity gains from AI adoption. Currently overlooked by the market, these companies are expected to see valuation expansions over time. The industrial sector exemplifies this trend. Since early 2023, industrial stocks have gained nearly 30%, with AI-exposed firms more than doubling in value. In Q4 2023, AI mentions in industrial earnings reports rose from 10% to over 30%. Goldman Sachs anticipates these trends will continue, with downstream AI stocks eventually rallying as their AI-driven efficiencies translate into earnings growth.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and AI News You Should Not Have Missed.
As the sudden popularity of Chinese AI startup DeepSeek ignites a tech selloff in the US stock market, investors are closely monitoring the non-tech AI opportunities that hold explosive growth potential. Earlier this month, Goldman Sachs released an investor note detailing some of the non-tech beneficiaries of the AI boom. Per the bank, the rise of AI-driven data centers was fueling a massive increase in electricity demand, with power needs expected to grow by over 160% by 2030. Nuclear energy is poised to play a critical role in meeting this demand, but it won’t be the sole solution. Natural gas, renewables, and battery storage will also be essential, according to Goldman Sachs Research.
The report notes that big tech companies have already signed contracts for over 10 GW of potential new nuclear capacity in the US, with three nuclear plants possibly coming online by 2030. Globally, governments are becoming more supportive of nuclear power, with the COP28 summit setting a goal to triple global nuclear capacity by 2050. However, challenges such as labor shortages, permitting difficulties, and uranium supply constraints may slow progress, the report warned. Renewables will also be a major part of the energy mix, with 40% of new capacity expected to come from wind and solar. However, their intermittent nature means they must be paired with battery storage and baseload sources like nuclear or natural gas. Despite lower energy costs for renewables, transmission and storage limitations pose challenges.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
For this article, we selected non-tech AI stocks by consulting an investor note from prominent investment firm Goldman Sachs. 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 engineer standing in front of a detailed control panel with the logo of the electric utility in the background, highlighting the innovation and technical expertise of the company.
Hawaiian Electric Industries, Inc. (NYSE:HE)
Number of Hedge Fund Holders: 32
Hawaiian Electric Industries, Inc. (NYSE:HE) engages in the electric utility businesses in the United States. There are various reasons that make this company a rewarding investment opportunity. The most compelling factor is its financial performance illustrated in the report for the third quarter of 2024. As per the report, total insurance recoveries and deferrals related to wildfire-related expenses provided a benefit of $27.4 million. Excluding these items, core net income was $52.2 million for the third quarter of 2024 compared to $61.5 million in the third quarter of 2023. This reflects the company’s resilience in managing unexpected expenses. Moreover, Hawaiian Electric Industries, Inc. (NYSE:HE) has designed a new three-year plan for wildfire prevention and resilience, including the deployment of new weather stations and AI-enabled cameras and the undergrounding of overhead power lines. The utility plans to deploy new technology, fortify infrastructure, minimize fire hazards, and expand community partnerships in an effort to reduce the risk of a wildfire started by its equipment, per actions detailed in a new Wildfire Safety Strategy.
Overall, HE ranks 29th on our list of non-tech AI opportunities amid DeepSeek selloff. While we acknowledge the potential of HE 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 time frame. If you are looking for a stock that is more promising than HE 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.