Evercore ISI analysts told investors in a note Monday that corrections are a normal part of bull markets, as seen during the Internet Boom of 1995-2000, and 2024's AI "Air Pocket" is no exception.
According to Evercore, this period presents an opportunity to gain exposure to long-term secular growth trends.
They state, "Corrections are normal in bull markets, 'Air Pockets' happened often in the Internet Boom of 1995-2000. 2024's AI' Air Pocket' is an opportunity to gain exposure to long term secular growth trends."
They note that generative AI (GenAI) applications are expanding beyond their initial scope, particularly into automation and robotics.
Evercore ISI Strategy estimates that 53% of each job can be leveraged by GenAI and automation, up from 32% under a "GenAI only" scenario. This suggests a significant potential for productivity improvements across various sectors.
They add that the AI revolution is not limited to the tech industry, with demand for productivity enhancements expected to grow as global labor supply is structurally limited by demographics.
GenAI applications are rising in sectors such as food, architecture, educational services, health care, and finance. Evercore notes, "GenAI is also more than just chatbots. Applications are rising in non-tech related sectors."
Evercore highlights three major avenues for robotic automation: training, communicating, and completely reworking internal operations. This broader application of GenAI could leverage 53% of each job in the U.S. economy, boosting productivity significantly.
Evercore ISI continues to expect "AI Revolutionaries" – companies with strong AI mentions – to outperform. These include NVDA, BKNG, and GOOGL.
They also highlight companies benefitting from structural investments in productivity, such as MSFT, VRT, AVGO, PANW (NASDAQ:PANW), and TER, expecting them to perform well. Overall, Evercore sees thus "Air Pocket" as a strategic buying opportunity for long-term investors.