We recently published a list of Beyond the Tech Giants: 35 Non-Tech AI Opportunities. In this article, we’ll look at how Voya Financial, Inc. (NYSE:VOYA) stacks up against other non-tech AI stocks.
Investors are desperate for a safer way to profit from the AI boom that has swept the U.S. stock market in recent months. Investment bank Goldman Sachs recently released an investor note detailing the sectors of the economy that stand to benefit from the AI craze, replacing the obvious tech bull cases with thoughtful analyses of AI’s long-term impact on utilities, manufacturing, retail and healthcare. AI tools appear poised to help companies outside the tech sector improve productivity and reduce labor costs, according to Goldman analysts. The investment titan detailed the insatiable appetite for AI, as evidenced by NVIDIA becoming one of the world’s most valuable companies over the past year, and noted that the market has yet to reward companies that have downstream exposure to AI.
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David Kostin, chief U.S. equity strategist at Goldman, wrote in the note to investors that the AI boom would likely unfold in four key phases. The first phase, the analyst said, focused on NVIDIA, the chipmaker that is at the forefront of building AI data centers. Kostin said the second phase would likely involve companies that are building AI infrastructure. Examples of this include semiconductors, data centers, networking, cloud and security, and utilities. So far this year, the returns of stocks working in these sectors have eclipsed the returns of benchmark indices. The third phase, the analyst continued, would involve companies that can integrate AI into their products and increase sales in the process. Kostin warned that these companies have lost ground to AI stocks in recent months.
The analyst said companies entering the fourth phase of the AI boom, those that would benefit from productivity gains after adopting AI, have been overlooked by the majority of the market so far. Kostin argued that it was unclear when these downstream AI stocks, some of which are detailed below, would recover and increase their earnings multiples, but stressed that it would happen eventually. The industrial sector highlights Goldman’s theory in action. Since the start of 2023, industrial stocks have jumped nearly 30% in value. Of these, companies directly exposed to AI verticals have more than doubled in value. In the fourth quarter of 2023, more than 30% of industrial companies mentioned AI in their earnings reports, compared to just 10% in the same period a year earlier.
Our methodology
For this article, we selected non-tech AI stocks based on an investor note from leading investment firm Goldman Sachs. These stocks are also popular among hedge funds. Why do we care about stocks that hedge funds invest heavily in? The reason is simple: Our research has shown that we can outperform the market by mimicking the best stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An investment chart with a close-up of a hand pointing to a particular asset on a financial chart.
Voya Financial, Inc. (NYSE:JOURNEY)
Number of hedge fund holders: 30
Voya Financial, Inc. (NYSE: VOYA) offers employee benefits and savings products in the United States and internationally. The company uses AI through the Voya Machine Intelligence (VMI) team, a part of the company’s investment group that uses AI for stock selection and asset management processes. The VMI team uses machine learning to develop investment strategies that combine human insights with the data-driven capabilities of AI tools. For example, the VMI team has focused on AI-driven portfolios, such as the Machine Intelligence Dynamic Global Equity strategy, which aims to outperform through AI-powered insights combined with traditional financial analysis.
Voya Financial, Inc. (NYSE:VOYA) is closely watched on Wall Street. Evercore ISI recently raised its price target on the stock to $82 from $79 and maintained an Outperform rating, noting that the financial company announced a definitive agreement to acquire OneAmerica Financial’s full-service retirement business. The board said the initial view was that the deal for OneAmerica’s retirement business was more similar to Voya’s acquisition of AGI, which was positive, than to Benefitfocus, which was more challenging.
Overall VOYA ranks 28th on our list of non-tech AI stocks. While we recognize the potential of VOYA as an investment, our conviction lies in the belief that certain AI stocks have more promise to deliver higher returns, and in a shorter time frame. If you are looking for an AI stock that is more promising than VOYA but is trading at less than 5x earnings, check out our report on the the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.