Goldman Sachs: Asian AI stocks are still attractive, supported by undervaluation and profit growth

The Zhitong Finance App learned that Timothy Moe, Goldman Sachs Group's chief Asia-Pacific stock strategist, said that despite rising government bond yields, artificial intelligence (AI) related stocks are still attractive.

“We clearly belong to the 'stronger, more enduring 'camp,” Moe said. He pointed out that the capital expenditure of hyperscale cloud service providers is expected to be about 800 billion US dollars this year, and will reach about 1.2 trillion US dollars by 2027. This is the main demand signal for the AI hardware supply chain in Asia.

Moe said Asia's “extremely low” valuations also provided additional support. The region's overall price-earnings ratio is about 10 times, which is at the lower end of the historical range. Earnings growth will also provide a buffer against higher interest rates, he added.

For the rest of the year, Moe expects the market to be “somewhat bumpy” before the US midterm elections, and that rising energy prices and geopolitical risks will increase the pressure. However, he said that after this period, driven by profit growth and valuations, the market is expected to rebound before the end of the year.