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A new wave of AI development is about to take shape — and Wall Street is starting to divert its attention from the market's largest companies to a different group of stocks, according to Bank of America.
In a recent note, the bank's strategists said they foresaw a coming "Agentic AI wave," referring to the second phase of artificial intelligence development. Possible beneficiaries include companies that are beginning to deploy AI through apps, or industrial and commercial robots.
There are some signs AI innovation is already headed in that direction, the bank added, pointing to new features added to AI software, like Google's Gemini, and robotic security dogs being deployed at Trump's Florida Mar-a-Lago.
Meanwhile, Bank of America clients are already beginning to shift their focus from the market's top AI names, like Nvidia, to what the bank believes to be the "second phase of AI beneficiaries," the note said.
"We urge investors not to diminish AI's near-term disruption potential in this early stage. Upside is unlikely to be fully priced in across the AI investment stack and, specifically, across our software coverage, in our view," strategists wrote.
"We expect AI monetization across our coverage to begin in 2025 as software's AI moment arrives and monetization to become meaningful in 2026 as enterprise adoption accelerates," they continued.
The bank reiterated its focus on six large-cap stocks, which it said were among its top picks as the Agentic AI theme plays out.
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In an early November note, the bank pointed to Microsoft's plans to supplement Copilot with more AI agents, which could help automate tasks related to sales, services, finances, and managing supply chains.
Strategists issued a price target of $510 a share, implying 23% upside from current levels.
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Salesforce plans on integrating AI agents into its range of products, which can help automate tasks in areas like customer service and marketing, the bank said.
The firm also finalized a partnership with Nvidia to create avatars that can automate tasks in customer service, crisis management, and other areas.
Strategists issued a price target of $390 a share, implying 14% upside from current levels.
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Adobe is planning to work AI tools into its product suite, including its Creative Cloud and Experience Cloud platforms. That can help automate tasks related to data analysis and creating new content, strategists said.
Bank of America issued a price target of $640 a share, implying 20% upside from current levels.
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The company is planning to deploy AI agents on its Now Platform, which can help in areas like IT management and customer service.
Strategists issued a price target of $1,075 a share, implying 1% upside from current levels.
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Intuit is also planning to integrate its AI agent across its range of products, which includes TurboTax, Credit Karma, and QuickBooks. That can automate tasks for users and businesses, like creating new bills or processing invoices.
Strategists issued a price target of $780 a share, implying 21% upside from current levels.
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The firm is planning to deploy an AI agent into its Marketing and Content Hub, which will help automate tasks in areas like marketing and sales.
Strategists issued a price target of $780 a share, implying 6% upside from current levels.
