Bank of America flags BGC as top AI stock in capital markets ahead of investor event

Investing.com -- Bank of America is hosting investor meetings next week with senior executives at private companies focused on AI innovation, and has identified BGC Group (NASDAQ: BGC) as its top AI stock in capital markets coverage.

The bank outlined five key opportunities AI creates for its coverage universe: new use cases for market data at exchanges, a migration toward cloud-delivered solutions at Nasdaq (NASDAQ: NDAQ) and Intercontinental Exchange (NYSE: ICE), higher retail investor engagement at online brokers plus Cboe Global Markets (CBOE: CBOE) and Virtu Financial (NASDAQ: VIRT), an enhanced value proposition for electronic trading at MarketAxess (NASDAQ: MKTX) and Tradeweb (NASDAQ: TW), and an acceleration in energy derivatives usage at ICE, CME Group (NASDAQ: CME) and BGC.

Bank of America said BGC is the largest energy broker in the world, and expects the company to be a critical partner in risk managing incremental energy demand as data center capacity grows to support AI adoption. The bank noted BGC possesses proprietary data on trading activity suited for training AI applications. With the highest compensation ratio in Bank of America's market structure coverage at 63%, BGC has the most to gain from AI-driven white-collar productivity enhancements, according to the bank.

Bank of America said generative AI will accelerate data revenue for companies with proprietary data by unlocking new use cases and clients, particularly in the retail channel. Across its market structure coverage, an average of 14% of net revenue stems from data.

The bank said generative AI allows for data science to be conducted in natural language, eliminating or reducing the need for programming knowledge. Token-based licensing models could make retail use cases more economical, the bank added.

Nasdaq announced its first data licensing agreement with an AI-powered search company in March.

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