Nearly two years into a bull market driven by AI, returns on big-cap tech companies have slowed. While they’re likely worth picking up during a market correction, better returns may lie elsewhere.
Rather, it’s smaller players less directly involved with the AI space that are likely to lead here. That still includes several hardware plays, as well as investments related to expanding the power grid and increased automation brought about by AI.
In that space, industrial automation leader
Emerson Electric (EMR) may fit the bill.
The company’s products and services play out for a long rollout of AI, and their latest earnings report also came with a number of new strategic actions to profit from that trend.
That could help accelerate the company’s earnings. Revenues already grew by 11% last year, and further gains are likely amid the buildout of AI infrastructure.
Action to take: Shares are up about in-line with the overall market over the past year, but are still reasonably valued at 19 times forward earnings. Investors may want to build a position at current prices, and use market pullbacks to add from there.
At current prices, Emerson pays a 1.9% dividend.
For traders, shares are trending higher and hitting new 52-week highs. That trend is likely to continue. The March 2025 $125 calls, last trading for about $4.10, could see mid-to-high double-digit returns over the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.