AI Stocks: Flex, Jabil Called Alternative AI Hardware Plays

Chipmakers Nvidia (NVDA) and AMD (AMD) are well-known beneficiaries of the artificial intelligence infrastructure spending surge, as are server makers Dell (DELL) and Super Micro Computer (SMCI). But there are alternative AI stocks in the computer hardware and networking space, investment bank JPMorgan said Friday.

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Topping its alternative list of AI beneficiaries are contract manufacturers Flex (FLEX) and Jabil (JBL) and optical networking gear maker Lumentum (LITE), analyst Samik Chatterjee said in a client note.

“The significant premiums we are seeing already in AI-levered companies are leading investors to look for alternative AI investments, even if they are not necessarily pure plays, but that can offer more attractive valuation entry points relative to AI pure plays,” Chatterjee said.

Lumentum will benefit from sales of its Cloud Light high-speed optical transceiver products to cloud service providers, he said.

Flex and Jabil will get a boost from assembling data-center gear for cloud hyperscalers, Chatterjee said. AI infrastructure products make up about 10% of sales at Flex and Jabil, he said.

AI Stocks: Top Stocks Benefiting From AI Trend

In the computer hardware and networking space, JPMorgan sees the top AI beneficiaries as Arista Networks (ANET), Coherent (COHR), Dell and Super Micro.

AI stocks have helped drive the stock market higher since ChatGPT kicked off the generative AI frenzy in late 2022.

Flex and Jabil are on the IBD Tech Leaders list. Also, Flex is on the IBD Global Leaders list.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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