3 alternative AI watchlist ideas for a Stocks and Shares ISA
With shares in Nvidia and Palantir looking expensive, Iâve been looking at some less obvious artificial intelligence (AI) names for my Stocks and Shares ISA. And a few look quite interesting.
The chorus of investors voicing concerns over an AI bubble seems to be growing. But I think there could still be opportunities in what looks like an industry that is likely to have huge long-term growth ahead.
Cooling
The fact that AI data centres have high electricity requirements is well-documented. The need for cooling has, by comparison, gone largely under the radar â but this is starting to change.
Enter The Chemours Company (NYSE:CC) which makes (among other things) chemicals used in liquid cooling systems. And this is the direction data centres have been heading in, away from air cooling.
This isnât showing up in the firmâs financials yet, but the company is signing deals and partnership agreements for 2026. So if the AI infrastructure build continues at pace, this could be a big winner.
Ongoing settlements connected to the firmâs environmental impact create risk. But investors looking for an AI name thatâs not (yet) making headlines should check out this one.
Smelting
Data centre building also takes a lot of aluminium. But since 2015, the number of smelters operating in the US has more than halved and tariffs have made it hard to replace this production.Â
At first sight, this makes it a good time to be Alcoa (NYSE:AA), which operates two of the four active aluminium smelters in the US. But tariffs have actually been a problem â and remain a risk.
A lot of Alcoaâs aluminium is produced elsewhere and it imports aluminium oxide for its US smelters. That makes tariffs a challenge for it, but the firm could be in an excellent position if things change.
For now, I think itâs one for the watchlist. But things can change quickly on this front and investors interested in the company should make sure theyâre ready if they do.
Chips
Amazon (NASDAQ:AMZN) isnât exactly going under anyoneâs radar. And yet I think the market might be underestimating the significance of its potential in the development of AI going forward.
Iâve got my eye on Trainium â Amazonâs custom AI chips. Compared to Nvidiaâs GPUs, they offer better performance, but this comes at the cost of less adaptability on an ongoing basis.
Right now, thatâs a big drawback, but this could change as AI progresses from training to inferencing, applications become more settled, and power demands are lower. And I’m not convinced the market realises this.
Antitrust is always a risk with Amazon and the next legal case always feels like itâs just around the corner. But with the stock down this year, I think investors should at least take a look.
AI strategies
There are lots of ways to invest in order to participate in the growth of AI. But the stock market has preferred some industries to others.
Chemours, Alcoa, and Amazon could all happily go on an investorâs watchlist right now. Despite the current focus on AI, there might still be undiscovered opportunities waiting to be found. We just need to think differently.
The post 3 alternative AI watchlist ideas for a Stocks and Shares ISA appeared first on The Motley Fool UK.
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Stephen Wright has positions in Amazon. The Motley Fool UK has recommended Amazon and Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
