Wall Street Eagerly Seeks AI Giant Abroad: What about Europe?

As AI reshapes industries, economies, and politics worldwide, Wall Street’s keen eye is now turning beyond the borders of the United States in search of the next frontier of the sector’s success. 

This shift in focus comes amongst a significant resurgence in emerging markets, with AI stocks spearheading a remarkable $1.9 trillion rebound this year, with industry giants like TSMC and SK Hynix accounting for a whopping 90%.

What sets this surge apart is the diversity of investment strategies being pursued by major financial players: 

Goldman Sachs Asset Management is focusing on the manufacturers of AI supply-chain components, such as cooling systems and power supplies. JPMorgan Asset Management, on the other hand, is favoring traditional electronics manufacturers that are transitioning into AI leaders. Meanwhile, investment managers at Morgan Stanley are betting on players where this cutting-edge tech is reshaping business models in non-tech sectors. 

The spotlight, however, remains on companies that were already technology leaders before the rally. TSMC and Hon Hai Precision Industry, better known as Foxconn Technology Group, stand out as prime examples of firms that have seamlessly integrated Artificial intelligence into their operations, solidifying their positions as frontrunners in the global AI race. 

Hon Hai exemplifies the AI sector’s rapid gains in emerging markets

Despite the undeniable appeal of emerging markets, investors remain wary of potential pitfalls. The close ties between emerging markets and the US mean that any artificial intelligence selloff in the US could echo across the globe. 

On the other side, if stock-market gains broaden, it is possible that other sectors could catch up, resulting in the artificial intelligence’s stocks falling behind. 

Yet, amidst the uncertainties, investors are increasingly turning to emerging markets as viable alternatives to overextended US tech stocks. As Morgan Stanley’s Managing director Jitania Kandhari said: “In emerging markets, they are seeing AI as an under-appreciated driver going forward, (…) There’s a lot of low-hanging fruit to juice there.” 

Wallstreet’s search of next AI giant coincides perfectly with “La villa Numeris”’s advocacy to create a European Ai giant. As we covered during our last LinkedIn post. 

European startups specializing in generative artificial intelligence have seen significant growth in recent months. According to a report published by Sequoia Capital on the European tech talent landscape, with nearly 200,000 engineers possessing some expertise regarding artificial intelligence, the continent hosts a significant talent pool. However, the driving force behind Europe’s AI revolution lies in a core group of approximately 43,000 dedicated specialists. It is estimated in the above-mentioned report that this group represents a per-capita concentration of experts that is 30% higher than in the U.S. and nearly triple that of China.  

 This marks the dawn of a highly promising sector for both Europe entrepreneurs and investors. And qualifies Europe as an emerging market.