AI's Uneven Growth, Regional Bank Picks, And Beaten-Down Retail Stocks In Focus As Wedbush Analyst Shares Insights

Kevin Merritt, the research director at Wedbush Securities, joined Benzinga's PreMarket Prep Wednesday and highlighted the firm's top bank picks, opportunities in beaten-down names and more. Merritt also spoke about the adoption of AI, and which companies will benefit from the technology in the medium to long term.

Merritt pointed out that despite the rally in large-cap techs largely driven by AI, it's a "mixed bag" in regards to which companies are the winners and losers of machine learning. 

"I do think there's going to be a fairly heated debate about who else benefits or loses… IT services right now is quite a mixed bag," Merritt said. "The likes of Accenture has had some tough quarters over the last year… quite a bit of debate about cannibalization vs opportunity."

Merritt highlighted Palantir Technologies Inc. PLTR as a company that has already capitalized on AI growth, while others, like Accenture Plc ACN, are expected to take longer to realize revenue gains from AI adoption. But, Merritt said that as more corporations adopt AI, IT and tech consulting companies like Accenture should benefit in the long term.

Read Also: Bill Gates Uses ChatGPT Daily: Microsoft Founder Shares What He Loves Most About AI Chatbot

Outside of tech and AI, Merritt pointed to the regional banking sector as one to watch. He said that Wedbush has recently become more bullish on the sector as economic conditions stabilize as the Fed cuts interest rates.

"We have been quite cautious on the regional and mid-cap bank group for the past couple of years and we just recently in the past couple of months turned to a more balanced, neutral sector view,” Merritt said. “And the thought being that to the extent the economy is able to hang in there, credit metrics don't exhibit too much deterioration, and you see rates move in a more favorable direction, it's appropriate to have a more balanced stance."

Merritt highlighted Western Alliance Bancorp WAL as a name that Wedbush analysts recently selected for the firm's "Best Ideas" list. Merritt also mentioned Comerica Inc CMA as a regional bank that Wedbush upgraded.

Keep Reading: Can Regional Banks Outperform Large Institutions As Fed Rate Cuts Loom? ‘Small Banks Are Plenty Cheap,’ But…

Merritt and the PreMarket Prep hosts also talked about some beaten-down retail investor favorites like Starbucks Corp SBUX, Nike Inc NKE and Celsius Holdings CELH. Merritt said that he believes newly-appointed Starbucks CEO Brian Niccol will have a “heavy lift” to turn the story around, but that there could be "strategic value" in Celsius's stock. 

Read Next:

• Meta Unveils New AI Features, Quest 3S, Llama 3.2, Holographic Orion Glasses At Connect 2024: ‘We Are Getting Closer To Achieving The Dream Of Reality Labs’

Image created using artificial intelligence via Midjourney.