4 ASX shares exposed to the 'largest technological change ever seen'

06/05/2024

4 ASX shares exposed to the ‘largest technological change ever seen’

Wilson Asset Management lead portfolio manager Oscar Oberg says the “transformative power” of artificial intelligence (AI) presents compelling investment opportunities involving many ASX shares.

From data infrastructure to healthcare and e-commerce, Osberg says companies embracing AI innovation are poised for growth and efficiency gains, which will make them attractive prospects for ASX investors.

“Across our investment portfolios, we are positioned to capitalise on AI developments and are focused on finding good quality companies run by strong management teams, with a catalyst to re-rate the share price,” he says.

Largest technological change ever seen

Companies already positioned to use AI to accelerate revenue growth and/or reduce operational costs would benefit most from this rising trend, according to Osberg.

He added that there was much excitement in the business community as to how AI might impact company operations, commenting:

In the past year, our small-to-mid cap investment team has conducted over 5,000 company meetings, engaging with management teams to explore how artificial intelligence (AI) could potentially reshape their business, both positively and negatively.

While it is early days, the consensus among these discussions is overwhelmingly positive, with many seeing AI as the largest technological change they have seen.

Which 4 ASX shares stand to benefit from the AI revolution?

Osberg names four ASX shares that he says are well-positioned to benefit from artificial intelligence.

NextDC Ltd (ASX: NXT) stocks

Osberg manages the WAM Capital Ltd (ASX: WAM) and WAM Active Ltd (ASX: WAA) listed investment companies (LICs), which both invest in NextDC shares.

This ASX 200 tech share has risen 21% in the year to date and 48% over the past 12 months.

“The surge in AI is expected to drive increased data consumption, storage and connectivity demands,” Osberg says.

“NextDC, a leading data centre operator, stands to capitalise on this trend, highlighted by its recent $1.3 billion capital raising to accelerate development of data centres in Sydney and Melbourne.”

Megaport Ltd (ASX: MP1) shares

WAM Capital also invests in Megaport shares. The Megaport share price has risen 47% in the year to date and 150% over the past 12 months.

“Furthermore, Megaport, a provider of on-demand data connection services, is well-positioned to leverage AI-driven revenue growth in data connectivity,” Osberg says.

Megaport reported a 785% improvement in EBITDA and a 43% jump in gross profit for the first half.

Pro Medicus (ASX: PME) stocks

This ASX 200 healthcare stock has risen 18% in the year to date and 88% over the past 12 months.

“Pro Medicus, a healthcare software provider, utilises AI to develop technology capable of assisting radiologists,” Osberg says.

Goldman Sachs forecasts AI to comprise 9% of Pro Medicus’ revenue by FY30.

The broker says:

PME is generating revenue from its Visage breast density AI algorithm â¦ today, and we see the potential value for AI to be significant with adoption driven by improved accuracy and clinical outcomes.

Temple & Webster (ASX: TPW) stocks

Osberg also manages the WAM Research Ltd (ASX: WAX) LIC, which is invested in Temple & Webster shares. The ASX retail share has risen 34% in the year to date and 205% over the past 12 months.

“As AI gradually reduces human involvement in routine tasks, e-commerce companies such as Temple & Webster stand to benefit by reducing operational costs through AI-driven automation, particularly in customer service activities,” Osberg says.

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