Morgan Stanley Sets Stock Picks for the "Data Era"

A new, one-of-a-kind data-driven technology cycle should boost a number of stocks in the sector for years to come, Morgan Stanley is advising clients.  In a research note, reported on by Bloomberg, the firm's research analysts noted that unlike previous computing cycles, this one has seen a number of new technologies -- including the Internet of Things, automation, artificial intelligence and virtual or augmented reality -- all emerge at the same time.

These data technologies will trigger $1.6 trillion in incremental IT investment in 10 years, more than double the $740 billion on average that was added in each of the previous three cycles, the analysts predicted. That optimism was fueled by Morgan Stanley’s belief that these latest advancements will be highly sought after by companies all over the globe as they promise to boost productivity significantly

“The dawning data-centered computing cycle can double incremental enterprise technology investment over the next 10 years and speed broader productivity growth for the first time in 20 years,” the analysts wrote.

The Biggest Beneficiaries

Morgan Stanley handpicked 15 stocks as the biggest beneficiaries of the “Data Era.” In its list were several U.S.-based companies, including Micron Technology Inc. (MU), Nvidia Corp. (NVDA), Cisco Systems Inc. (CSCO), Hewlett Packard Enterprise Co. (HPE), Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), International Business Machines Corp. (IBM), Microsoft Corp. (MSFT), Broadcom Ltd. (AVGO) and Seagate Technology Plc (STX).  The other names it identified were: Samsung Electronics Co. Ltd., Hikvision Digital Technology Co., Alibaba Group Holding Ltd. (BABA), Amadeus IT Holdings and Dassault Systemes.

The analysts said that semiconductor stocks have already begun to benefit from the latest computing cycle. Next up, it expects infrastructure providers to excel, citing strong performances by Cisco, Hewlett Packard Enterprise and Seagate Technology so far this year, followed by cloud providers, such as Amazon, Microsoft, IBM and Alibaba.