Discover how these companies are leveraging AI to drive growth
- Domino’s Pizza is expected to see almost 9% EPS growth in 2024
- Eaton expects EPS to grow about 11% to $9.95 in 2024
- Both companies are using AI to drive sales and improve operations
- JPMorgan Chase, T-Mobile US, Boston Properties, and Emerson Electric are also mentioned as stocks benefiting from AI
The market is hopeful that artificial intelligence can lift companies’ profits—and not just for Big Tech. To find stocks that can still benefit, though, one must look for those that remain cheap enough. The Invesco S&P 500 Equal Weight exchange-traded fund, which weights each stock in the index equally, is up just over 7% this year. The higher valuations reflect the expectation of growing earnings, partly as a result of companies’ use of AI. For the next two years, aggregate sales for the ETF are expected to grow about 4.3% annually, according to FactSet, as the economy remains growing, especially as the Federal Reserve is now more likely to cut interest rates than lift them. EPS forecasts call for annual growth over the next two years of 10.5%, driven by rising operating profit margins. Much of that is because analysts expect firms to keep the increase in operating expenses limited as they use AI to target sales opportunities in place of new hires. Strategists at Evercore screened the Russell 3000 for stocks that are trading at multiples of 2024 expected EPS below their five-year averages, are expecting bottom-line growth, have mentioned AI on their earnings calls, and have market values of above $3 billion. Some names in the screen include JPMorgan Chase, T-Mobile US, Boston Properties, and Emerson Electric. Another is Domino’s Pizza. The stock trades at 25 times earnings, below its five-year average of 28 times. Analysts are expecting almost 9% EPS growth in 2024, to $15.70. That would come from expected sales growth of almost 7% to $4.8 billion as the company adds store locations. Same-store sales are expected to nudge slightly higher from higher prices. One of the keys analysts hope can help Domino’s execute these initiatives is digital sales, as it uses Uber Eats and its own app to drive purchases. That’s where artificial intelligence comes in. The company said on its October earnings call that it’s using AI to personalize the user experience on food-ordering apps, which could keep customers loyal. Management also cited “streamlined operations” as a result of AI. Then there’s Eaton, the $95 billion manufacturer of products that enable the production of energy-efficient power in various industries. The stock trades at about 23 times earnings, a few points below its five-year average. Analysts expect EPS to grow about 11% to $9.95 in 2024. Driving that would partly be sales growth. Eaton also expects its end markets to continue growing as its customers increasingly build out AI-powered equipment. To prepare for the demand, the company doesn’t have to drastically increase salary expenses, with Wall Street looking for general and administrative expenses to drop a few hundred million dollars to $576 million next year, lifting operating profit margins.
Factuality Level: 7
Factuality Justification: The article provides information about the use of artificial intelligence in companies and how it can potentially impact their profits. It mentions specific stocks that are expected to benefit from AI and provides details about their valuations and growth forecasts. The information seems to be based on analysts’ expectations and earnings calls. However, there is no indication of any bias or personal perspective presented as universally accepted truth. The article does not contain any invalid arguments, logical errors, inconsistencies, fallacies, faulty reasoning, false assumptions, or incorrect conclusions. Overall, the article appears to be factually accurate and objective.
Noise Level: 4
Noise Justification: The article provides some information on companies that are using AI and their expected growth, but it lacks depth and analysis. It mainly focuses on stock valuations and earnings forecasts without providing much insight into the long-term trends or antifragility of these companies. The article also lacks evidence or data to support its claims and does not provide actionable insights or solutions for the reader.
Financial Relevance: Yes
Financial Markets Impacted: The article discusses stocks and their valuations, as well as the use of artificial intelligence in companies like JPMorgan Chase, T-Mobile US, Boston Properties, Emerson Electric, Domino’s Pizza, and Eaton.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article focuses on financial topics such as stock valuations and the use of artificial intelligence in companies. It does not mention any extreme events or their impacts.
Public Companies: Domino’s Pizza (DPZ), JPMorgan Chase (JPM), T-Mobile US (TMUS), Boston Properties (BXP), Emerson Electric (EMR), Eaton (ETN)
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