CIO rates the US IT sector as most preferred within US equities, both on its growth prospects but also thanks to its above-average tilt to quality. (UBS)

Semiconductor firm AMD unveiled two new AI chips, with the potential to lower the cost of developing artificial intelligence applications. In addition, Google parent Alphabet said it had started rolling out aspects of its next generation “Gemini” artificial intelligence model via its Bard chatbot in 170 countries, as well as on its Pixel phones.


Finally, Elon Musk's unlisted xAI filed with the SEC to raise up to USD 1bn in fresh capital, while AI infrastructure startup Vast Data raised a new round at a USD 9bn valuation.


Without taking any single-name views, strong AI capital expenditures, continued AI-based service rollouts, and solid capital raising all point to strength and durability in the AI growth cycle. We think AI is one of the
most compelling long-term investment opportunities today, with demand anticipated to expand at a compounded annual growth rate of 61% from 2022 to 2027.


Takeaway: We continue to see tactical opportunities within the semiconductor sector, and we favor large-cap AI beneficiaries across software and internet. We rate the US IT sector as most preferred within US equities,
both on its growth prospects but also thanks to its above-average tilt to quality.


For more, see the latest Weekly Global - A fine line to tread for the US economy , 11 December, 2023.