As the rise of AI continues to captivate investors, attention is shifting to opportunities in the small and mid-cap sector. Lisa Thomas, deputy director of research at TD Cowen, joins Catalysts to highlight promising investments in AI beyond the usual big names in tech.
Thomas suggests that investors looking to get into the AI space should consider data center plays like Credo (CRDO) or DigitalBridge (DBRG). She says these companies offer “very good opportunities” for portfolio diversification with significant upside potential.
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This post was written by Angel Smith
Video transcription
Big names like NVIDIA have obviously really dominated this rise of AI.
Which smaller names should investors look at if they want to get into AI, but in the small and mid-cap space?
Yeah, again, we think some of these names like Credo, which we just upgraded or the digital bridge are great ways to play the data center role and we just had our entire technology team with, I think it was a 400+ page report from TD Cowan on you know, the data center and all the elements of the data center or the investment that people should be focusing on because you know, whether it’s looking at the power constraints that are going to be driven by this huge increase in reliance on data centers or whether it’s the speed enablers and the data center architecture enablers like Credo or whether it’s looking at a broader portfolio of names around digital infrastructure where you have the opportunity to be a lever for a number of really high quality names through an investment in the digital bridge.
We think these are very good opportunities.
They still have a lot of upside potential, you know, as you point out, you know, large cap stocks have really outperformed.
And of course, it’s actually a very small number of stocks within the large-cap space, the Magnificent Seven, and even a smaller concentration within it, that have outperformed.
So we think now is a good time to publish this article because investors are really taking a step back from SMS which are undervalued or certainly seeing a near historic valuation gap compared to large caps.
And they’re really wondering if this is an opportunity to expand their portfolios and potentially expand the recovery.
Um, so that more people and stocks in the market participate in it.
Alright, we’ll have to stop there, Lisa, thank you so much for joining us.
It was Lisa Thomas TD Cowan, Deputy Director of Research.
