There are two key trends I expect to see in the second half of 2023. One, increased consumer spending on physical products, and two, continued AI proliferation. The three high-growth sectors I’ll profile in this column are poised to benefit from these trends.
Notably, the trend of increased spending on physical products was, I believe, foreshadowed by macroeconomic data released on June 5. On that day, the Institute for Supply Management reported a decline in non-manufacturing PMI from 51.9 in April to 50.3 last month.
Meanwhile, “orders for non-defense capital goods excluding aircraft rose 1.3% in April,” coming on the heels of a 1.4% increase in the same metric in March. The gains suggest US factories are gearing up to increase output of consumer goods in anticipation of rising demand in H2 2023. Thus, analysts and companies indicate that demand for consumer electronics has likely bottomed and will rebound in the second half.
Of course, AI’s tremendous power has taken the business world and consumers by storm and will continue to do so.
With that said, here are my three top sectors for investment for the second half of 2023.
E-Commerce
E-commerce will benefit from increased consumer buying activity in the second half of this year.
Why? Well, the sector is poised to get a big boost from the proliferation of AI. The technology will boost e-commerce revenue by targeting consumers with personalized ads and product suggestions. Additionally, the technology will reduce costs for suppliers, enabling e-commerce firms to offer better prices, increasing profits along the way.
Investors will see e-commerce companies benefit from autonomous vehicles, drones, and robots enabled by AI. What’s more, the repetitive routes that e-commerce companies utilize are tailor-made for autonomous vehicles. Experts have highlighted significant demand for autonomous trucks in optimizing supply chains and reducing delivery expenses.
Accordingly, among my favorite e-commerce stocks to buy right now are Amazon (NASDAQ:AMZN), Coupang (NYSE:CPNG), and JD.com (NASDAQ:JD).
Robotics
I believe that, as excitement over the capabilities of AI greatly increases, the utilization of AI-powered robotics will surge. Increased AI investments will enhance robot capabilities, driving higher adoption and utilization across firms. These trends should start becoming evident in the second half of the year. As a result, I believe that robotics is one of the top high-growth sectors in which to invest at this point.
Already, many more industries are starting to utilize robots than in the past, with health care, aerospace, and even food and beverage firms using robots on a wider scale. Tech giants like Amazon and Tesla (NASDAQ:TSLA) are leading the way with widespread robot usage, inspiring other firms to follow suit.
Indeed, according to Investopedia, “market research analysts have forecast the robotics market will expand to $214.7 billion by 2030, growing at a compound annual growth rate (CAGR) of almost 23%.1.”
Currently, some of my favorite picks in the robotics space are ABB (NYSE:ABB) and Nuance Communications (NASDAQ:NUAN).
Semiconductors
Semiconductor, or chip, makers have a wide range of massive, positive catalysts going forward. Among these catalysts are the huge demand for chips needed to create AI systems, and tremendous increases in the amount of chips used in automobiles.
Further, on the AI front, data centers are going to need to utilize more chips in order to generate the computing power and network bandwidth that are required to process AI workloads.
Indeed, many chip makers beyond Wall Street’s favorite name in the sector, Nvidia (NASDAQ:NVDA), are going to benefit from these strong trends. For example, Qualcomm’s (NASDAQ:QCOM) chips appear to have more “power efficiency” than those of Nvidia. Consequently, Qualcomm’s offerings are well-positioned to be used to power AI systems after they’re launched.
Moreover, Applied Materials (NASDAQ:AMAT), whose equipment is used to make chips, is going to get a big lift from surges in the sheer number of chips needed to create and power AI systems and automobiles.
Finally, Intel ‘s (NASDAQ:INTC) chips appear to be well-suited for generating “some AI capabilities,” while the company appears to be poised to manufacture many chips for Nvidia.
Accordingly, given the proliferation of the Internet of Things and artificial intelligence, these stocks are likely to continue to surge higher from here.
As of the date of publication, Larry Ramer owned shares of INTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
