South Korea’s record current account surplus, driven by semiconductor exports, shows how central chips and AI hardware have become to global trade. When supply chains hinge on AI infrastructure, investors who ignore AI stocks risk missing a key engine of market returns. This article highlights 3 stocks from our Artificial Intelligence Stocks screener that sit in the path of this trend and warrant closer examination.
The 3 stocks below are just a sample, and the full screen surfaces 24 more AI companies with equally compelling stories that are not covered here. To go deeper into this opportunity set, head straight into the Artificial Intelligence/ AI Stocks screener to identify and analyze the highest conviction plays in the ChatGPT and AI space.
Netweb Technologies India (NSEI:NETWEB)
Overview: Netweb Technologies India designs and manufactures high end computing systems in India, offering supercomputers, AI servers, data centre hardware, storage and networking gear, along with cloud and managed services for sectors like IT, finance, government, defense and research under its Tyrone brand.
Operations: Netweb Technologies India currently generates revenue primarily from manufacturing and selling computer servers, contributing about ₹27,020 million.
Market Cap: ₹274.2 billion
Netweb Technologies India provides direct exposure to the hardware and infrastructure that power AI and high performance computing, from supercomputers and AI servers to private cloud platforms. The company’s recent quarterly results report year on year growth in both revenue and earnings, and analysts currently project earnings expansion with high returns on equity, which may help explain the premium P/E multiple. At the same time, heavy dependence on large government and defense projects, relatively low export exposure and rising working capital needs mean cash flows and margins may not be as smooth as the headline growth suggests. For investors focused on AI infrastructure, this mix of business strengths and specific risks may warrant closer evaluation.
Netweb Technologies India sits at the heart of India’s AI hardware build out, yet the real story may lie in how current earnings expectations compare with that premium P/E. Get the full picture in the analyst forecasts for Netweb Technologies India
Build your own AI infrastructure shortlist
Netweb Technologies India and the other two stocks in this article all surfaced from a single Simply Wall St screen, but the real edge comes when you shape the filters yourself. Turn our flexible Screener into a shortlist that fits your style, or jump straight into our curated Investing Ideas for ready made themes and stock groups.
KPIT Technologies (NSEI:KPITTECH)
Overview: KPIT Technologies builds the embedded software and AI systems that run modern vehicles, from autonomous driving and advanced driver assistance to vehicle operating systems and cloud connectivity, for carmakers across the Americas, Europe and Asia. The company focuses entirely on automotive and mobility software, supplying code and platforms that help global original equipment manufacturers bring software defined vehicles to market.
Operations: KPIT Technologies generates its revenue from clients across the Americas, UK & Europe and the rest of the world, with reported segment values of ₹18,506 million, ₹34,668 million and ₹32,113 million respectively, adjusted by inter segment revenue of ₹19,375 million.
Market Cap: ₹169.6 billion
KPIT Technologies gives you targeted exposure to the software inside cars at a time when code is taking a larger share of every vehicle’s cost. The company has a record of high EBITDA margins and tight control of staff turnover. However, the stock has recently been weak after an earnings shortfall and a drop in profit margins to 8.8%. Reported expectations of earnings growth of about 19% a year, high quality earnings and a P/E that sits below many software peers make the current valuation an area some investors may analyze in more detail. At the same time, rising use of external borrowings, management with relatively short tenures and pressure on margins indicate that execution risk remains a key consideration for investors following KPIT Technologies in the AI and automotive software space.
KPIT Technologies has stalled on margins while its automotive software story keeps building, which raises a sharper question about what is already priced in. Step into the full analysis report for KPIT Technologies
Tata Elxsi (BSE:500408)
Overview: Tata Elxsi helps global clients design and build software heavy products and services, from media and telecom platforms to automotive, healthcare and industrial systems, using a mix of product engineering, AI tools and systems integration.
Operations: Tata Elxsi generates the vast majority of its revenue from Software Development and Services at about ₹37,846 million, with a much smaller contribution of around ₹1,018 million from System Integration and Support Services.
Market Cap: ₹232.3 billion
Tata Elxsi sits at the crossroads of AI, automotive software and digital health, with platforms that touch autonomous driving, connected cars and AI based medical diagnostics. Earnings growth has been moderate and last year saw a decline, and analysts see revenue rising slower than the wider Indian market, while the stock trades on a richer P/E than many software peers. At the same time, returns on equity above 20%, a long record of high quality earnings and a roughly 2% dividend yield describe a business that continues to generate cash. For investors tracking AI enabled platforms rather than pure chip plays, the mix of new deals in media, auto and MedTech alongside higher funding risk makes Tata Elxsi a company that some market participants may examine more closely.
Tata Elxsi couples rich P/E and steady cash generation with a footprint across auto, media and MedTech that many investors may not have fully priced in yet. See how the analysis report for Tata Elxsi frames one underappreciated swing factor that could tilt the story.
Seeking Alternatives Before Momentum Flies
Fresh stock ideas can move from quiet to flying fast. Screens fill up and prices shift before the crowd catches on. Check these curated lists now and review them early.
- Spot companies with clean balance sheets and steady fundamentals by running the list of solid balance sheet and fundamentals (422 results) while it is still under the radar for now, then assess them before any momentum builds.
- Explore potential income and resilience by scanning 441 dividend fortresses and see which high yield stocks still trade at levels that may appear attractive if momentum develops.
- Position ahead of wider electrification themes by checking 36 power grid technology and infrastructure stocks and identify infrastructure stocks that may gain attention as grid upgrades and demand growth draw fresh interest.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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