MW Play the AI boom without the bubble risk via these 'transition' stocks, says Bank of America
By Jules Rimmer
Defense, infrastructure and some metals stocks can help investors get indirect AI exposure
Investors are worried about an AI bust. Bank of America says "transition" stocks are the answer.
Investing in AI without actually investing in it is one way to sidestep concerns among some investors that a bubble is building for the hot technology.
That's according to Bank of America's global research team who suggest "transition investing" as a way for investors to participate in the boom without the risk.
In the bank's December's fund manager survey, more than a third of its clients continued to highlight an "AI bubble" as the most significant growth tail risk - that is an unlikely event that if it happened, would result in a big market bust.
Analysts Haim Israel and Menka Bajaj recommend investing in sectors like defense, infrastructure and metals involved in the AI-driven energy transition - nickel, aluminum, silver, copper, for example - to benefit from this enormous technological revolution, in the note that published Thursday. They assert that stocks in these industries "offer relative resilience against AI-driven swings, anchored by policy, geopolitics and supply chain fundamentals."
Some of these companies - BAE Systems (UK:BA), Tencent Holdings (HK:700), Deutsche Telekom (XE:DTE), Heidelberg (XE:HEI) and BYD (CN:002594) - are well-known to investors, while others might be less familiar.
To be clear, Bank of America analysts say that they do not see an AI bubble in the making and the technology is "the real deal." Investment in that theme "remains grounded in real demand and productivity gains, not mere hype," said Israel and Bajaj, who believe the AI buildout is only three years into a platform cycle that typically lasts 10-15 years.
The transition investing theme into defense, infrastructure and transition metals is reinforced by $40 billion of inflows into these names last year and the promise of $1 trillion of national security commitments, by rising resource nationalism and the push for energy independence. Crucially, for the note's authors, correlations with AI stocks remain below 50% at this stage.
Contrast this, for example, with the correlations of AI cleantech to direct AI stocks. Last year they rose from around 10% to 65%, heightening the downside risk if the bubble bursts.
Bank of America's global research department estimates $1.2 trillion of AI-related capex by 2030 - three times the 2025 amount - but say buildout constraints create an opportunity.
The insatiable appetite of AI for energy and surging power demand is accelerating investment in grids and storage. They forecast $150 billion in AI infrastructure capex by 2028, generating huge demand for critical minerals like copper, lithium and nickel that will likely exceed supply.
Israel and Baja predict AI applications in agriculture, water, energy and transport could unlock $5.2 trillion in productivity gains. Screening markets for the optimal stocks to exploit these trends, they produced a list of companies across energy efficiency, battery materials, infrastructure and defense/security themes.
Those names offer access to the upside of AI, while navigating potential turbulence in the more obvious, well-established plays, they say.
Below are global companies flagged by BofA Global Research with low AI beta - less volatile and less sensitivity fluctuations by AI stocks - high quality, high growth factors and buy-rated, sorted by quality ranks, as of 01/13/2026:
Ticker Name Sector Mkt Cap ($bn) 3Y Beta 1Y Beta Quality Growth Value AE:SALIK Salik Industrials 13.6 0.12 0.22 100 60 14 AMT American Tower Real Estate 81.4 0.15 -0.14 99 64 20 HK:9863 Leapmotor Consumer Disc. 8.1 0.39 0.25 99 99 39 HD Hyundai Electric Industrials 22.3 0.68 0.76 98 98 22 MSI Motorola Solutions Tech 65.1 0.42 0.38 97 54 20 HK:3993 CMOC Group Materials 69.6 0.52 0.64 95 97 74 TT Trane Technologies Industrials 86.7 0.80 0.75 94 76 25 HK:669 Techtronic Ind Industrials 23.4 0.71 0.77 92 60 62 FR:HO Thales Industrials 62.1 0.08 -0.10 90 53 54 SA:7203 Elm Company Tech 17.0 0.42 0.27 88 78 16 HK:700 Tencent Holdings Comm. Svcs 740.5 0.46 0.22 86 80 36 FR:LR Legrand Industrials 38.7 0.62 0.77 82 53 41 XE:DTE Deutsche Telekom Comm. Svcs 158.4 0.14 -0.05 82 52 85 PH:ICT Intl Container Term Industrials 20.6 0.32 0.37 80 90 42 UK:BA BAE Systems Industrials 82.4 0.24 0.20 77 56 51 TW:2308 Delta Elect Tech 87.1 0.75 0.61 76 95 32 VMC Vulcan Materials Materials 41.1 0.48 0.46 76 66 24 DOV Dover Corp Industrials 28.0 0.72 0.79 75 59 38 TW:3665 BizLink Industrials 9.2 0.60 0.60 71 94 41 CN:002594 BYD Consumer Disc. 121.0 0.62 0.64 64 50 76 MY:8869 Press Metal Materials 14.9 0.26 0.13 57 73 31 TW:1590 AirTAC Industrials 6.3 0.54 0.27 55 71 34 GMR Airports Ltd Industrials 11.7 0.01 -0.07 55 100 10 XE:HEI Heidelberg Materials Materials 48.3 0.68 0.63 53 68 69 IN:532868 DLF Real Estate 17.8 0.01 -0.05 51 74 6 TW:2317 Hon Hai Prec. Tech 103.6 0.57 0.55 50 87 87
The analysts say the key is selective positioning, allowing the participation in the AI growth narrative but nonetheless, caution that an AI bubble popping could still trigger spillover sell-offs across these transition strategies as short-term correlations spike.
-Jules Rimmer
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(END) Dow Jones Newswires
January 16, 2026 07:07 ET (12:07 GMT)
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