Who are AI Winners in Europe? UBS Lists 5 Stocks

Investing.com -- European companies providing critical infrastructure for artificial intelligence (AI) development are gaining investor attention despite bubble concerns, according to recent UBS conversations with European investors.

While approximately 90% of investors acknowledged being in an AI bubble, most remain invested in AI-related sectors.

UBS reports that investors are particularly focused on companies addressing key AI infrastructure challenges, including power management and data center capabilities.

Power supply concerns rank among the top issues for AI development, creating opportunities for companies specializing in energy management solutions.

Here are the top 5 European stocks which investors believe are well positioned to benefit from AI infrastructure, according to UBS.

Legrand is seen as an AI winner due to its comprehensive portfolio of electrical and digital infrastructure solutions. The French company’s power management systems and data center infrastructure products address critical AI deployment challenges, particularly energy efficiency concerns that investors highlighted as a major constraint for AI expansion.

Legrand reported second-quarter results that exceeded analyst expectations, with operating profit coming in 8% above consensus, and subsequently raised its margin guidance. The company also received price target increases from both Deutsche Bank and Citi, citing data center growth.

Schneider Electric’s solutions help data centers optimize power usage, a crucial factor as UBS notes investors are questioning whether sufficient electricity will be available to power the massive expansion of AI computing facilities.

Schneider Electric has recently reached an agreement to acquire Temasek’s 35% stake in their Indian joint venture, Schneider Electric India Private Limited, for €5.5 billion.

Belimo, the Swiss manufacturer of actuators, valves, and sensors, is also included in the list. The company’s products are essential for climate control systems in data centers, helping manage the significant cooling requirements of AI infrastructure while improving energy efficiency.

Halma, a British group focused on safety, health, and environmental technology, also deserves a mention. The company’s hazard detection and life protection systems are increasingly important as data centers expand, addressing safety concerns in these critical facilities.

Halma recently raised its full-year revenue growth forecast to low double-digits, driven by strong performance in its photonics business. The company also acquired Brownline, a provider of gyroscopic locating systems, for €150 million.

ASML rounds out the top five with its advanced semiconductor manufacturing equipment. While primarily known for chip production technology, ASML’s tools are fundamental to creating the processors powering AI systems, though investors expressed concerns about what percentage of hyperscaler capital expenditure flows to semiconductor companies.

ASML has received a reiterated Buy rating from Goldman Sachs, which pointed to strong AI-driven demand, while Wolfe Research also maintained its Outperform rating.

Additionally, the company appointed Marco Pieters as its new Chief Technology Officer.

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