Demand for AI-enablers such as data centers, power producers and grid operators is on the rise, according to Morgan Stanley, and a number of Asian companies stand out as potential plays. The Wall Street bank estimates that another 1 gigawatts in potential power has been “underwritten as these data centers ramp up.” “With $50 billion in committed AI/DC [data center] investments, we see upside to power gencos and grid operators in the region,” Morgan Stanley’s analysts wrote in a June 2 research note. Below are three stocks from Morgan Stanley’s list that stand out for having significant upside potential, according to FactSet’s consensus price targets. Top stocks Morgan Stanley’s bullish position on Tenaga Nasional follows the announcement by Google that it is investing $2 billion to develop a data center and cloud hub in Malaysia. “We estimate that this will add [around] 350 Megawatts of power demand and should strengthen investor confidence in Tenaga Nasional — Malaysia’s sole grid operator,” the analysts said. Tenaga is listed on the Bursa Malaysia and trades as an ADR in the U.S. Shares in Tenaga are also included in the iShares MSCI Malaysia ETF (6.7% weight) and Global X FTSE Southeast Asia ETF (2.3%). Analysts polled by FactSet give the stock a price target of 14.62 Malaysian ringgits, giving it around 6% potential upside. Across the causeway in Singapore, Morgan Stanley’s analysts see potential in conglomerates including Keppel and telecommunications operator Singapore Telecommunications given the city state’s tight power markets and plans for at least 500 megawatts of potential new data centers . Both stocks are listed on the Singapore Exchange . Keppel has an ADR in the U.S. and Singapore Telecommunications trades over the counter . Shares in Keppel are also included in the iShares MSCI Singapore ETF (4.4% weight) and Global X FTSE Southeast Asia ETF (1.6%) Analysts give Keppel and Singapore Telecommunications around 26% and 22% potential upside, respectively, according to FactSet. — CNBC’s Michael Bloom contributed to this report.
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