3 idées pour la révolution de l'IA

De la vidéosurveillance à la transformation digitale des entreprises, Chris Ford, co-gérant du fonds Sanlam Global Artificial Intelligence suggère 3 idées dans le secteur.

Sunniva Kolostyak 20.04.2023
Facebook Twitter LinkedIn



Sunniva Kolostyak: Today in the studio, I am joined by Chris Ford from the Sanlam Global Artificial Intelligence Fund and he's here to give us his top three stock picks for the AI sector. So Chris, thank you very much for being here. What's your first stock?

Chris Ford: Well, it's been difficult to choose them. We've got a lot to choose from. The first stock I'd like to talk to you a little bit about is a company called Axon Enterprise. And Axon is a very interesting company that many people may have come across because a long time ago their founder and CEO of Axon invented the Taser. Which of course is now widely used in law enforcement around the world as an alternative to using traditional firearms. But what Axon has done subsequently is to build on top of that Taser solution, a significant array of sensing solutions, which are now the leading solution for first responders, not just police forces, but also for ambulance people, fire services. In their use of body cams, fleet cameras on their vehicles or on drones, and then all of the cloud software and services and analytics that go on top of that. And Axon has really gone from being this point provider of electric weapons to replace traditional firearms, to now a solutions provider that is the means by which large quantities of data are captured at the scene of a crime or of a fire or of an accident. And that it can then be used through their platform called Evidence.com to curate all of that data and provide that data either to the court or to public inquiries if something goes wrong. It's a really important use of AI.

They use convolutional neural networks for object recognition, facial recognition, as well as other forms of artificially intelligent systems to facilitate this interpretation of vast quantities of data. And what practically this leads to is that first responders are no longer left in a position whereby they spend disproportionate amounts of time sitting behind a desk writing up the experience that they've had as they responded to an incident, but also that capturing of data in the interpretation recording of data is done in a much more objective and comprehensive manner. And that, of course, leads not just to an expedition of the legal process, for example, but also it helps with keeping first responders accountable for their actions. And of course, for those of us who've seen and looked on with horror at some of the behavior of law enforcement professionals in the North American market, in particular over the course of last few years. This ability to replace firearms with electric alternatives and to keep those people accountable for their actions through the use of smart, intelligent data gathering technologies is, in our view, extraordinarily important.

Kolostyak: So what is your second stock pick.

Ford: So second is a very different stock. So Axon is quite expensive. It trades at 9 times sales. This stock is quite the opposite. So this stock trades at 11 times earnings and it's a stock which many people will have come across, Hitachi. And Hitachi is a grand old, participant in the Japanese market. Everybody will have a view on it or encountered Hitachi solutions at one point or other in their life. But Hitachi has really significantly changed over the course of the last, shall we say, five years, maybe seven. And it's massively rationalized its business portfolio, stripping away some of those older businesses. Their slower growth businesses, more asset intensive businesses and really focusing down on two businesses broadly green transformation and digital transformation and of course it's a digital transformation, which we're really interested in.

Hitachi has a platform that they call Lumada and Lumada is the leading Internet of Things platform globally. And through a number of acquisitions and investments that they've made over the course of the last decade or so, they've taken Lumada to this point of preeminence whereby they now are not only in a position to provide the digital AI enabled tools to facilitate the IoT world, but they also now through a couple of acquisitions have the professional services, skills base that will allow them to hold the hands of other companies as they tiptoe into the artificially intelligent world. And that's really important because most companies don't have sufficient skills internally to be able to allow them to come into the artificially intelligent world because of its nature. AI is new and slightly disconcerting for people who don't have those skills (indiscernible). So having companies like Hitachi out there and able to help others to come into the AI world we think is going to be extraordinarily important.

This company is still priced as a traditional industrial conglomerate and we think that's what the street is misunderstanding here. This is going to be seen in a couple of years' time to be a digital transformation, green transformation business growing its revenues very, very significantly ahead of what might have been expected previously of Hitachi up towards 20% in our view with EBIT margins also expanding from the mid to high single digits into the low double digits. And we think the market will pay a significantly higher premium for that.

Kolostyak: So we've got law enforcement and digital transition.

Ford: Yeah.

Kolostyak: What's your third stock?

Ford: So the last one is, I suppose it's slightly in between Axon and Hitachi and there's a company called Arista. And Arista Networks is a lovely business that was founded in Silicon Valley by some of the real aristocracy of the technology world in Silicon Valley particularly a guy called Andy Bechtolsheim who is now I think in his 70s but was one of the very early movers in the networking space in the 1990s and 80s. And a guy called Ken Duda, who is one of the key software developers in the networking space. And what Arista do is they provide leading edge really, really fast switching for networking architectures. Why is that important? Well, one of the features of the artificially intelligent world is that data just gets bigger and bigger and bigger and bigger and bigger and more and more curated. And as that gets bigger, the power of the high power computing facilities gets bigger and bigger and bigger as well. So you have this requirement to move more and more data in and out of these high power computing facilities. And so one of the problems with that is that moving this huge amount of data is really hard and that traditional switching topographies inside data centers really aren't fit for purpose anymore. And Arista as the leading provider of Ethernet switching inside data centers we think is extraordinarily well placed to be the company that really kind of removes the bottleneck from this whole edifice.

They participate in the legacy market as well, but they only have about 17% market share of the total switching market. They have about 30%, just over 30% of the overall of the switching market at the leading edge and as the market moves in that direction, they're in a very, very good place to benefit. And to put just some numbers around that, that leading edge switching market in the data center was thought to be about $500 million in size last year. It's going to be probably more like $6.5 billion by 2027, so very elevated levels of growth.

Kolostyak: Chris, thank you very much for giving us your stock picks. For Morningstar I'm Sunniva Kolostyak.

Facebook Twitter LinkedIn

A propos de l'auteur

Sunniva Kolostyak  est data journaliste chez Morningstar.