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Investors are paying near five-year-high premiums for toothpaste, cereal and drug stocks. At the same time, they are selling the companies building artificial intelligence at a market discount.

HSBC’s U.S. equity strategy team, in a research note titled, “Don’t waste a good sell-off,” named 11 Buy-rated stocks that have been hit as the AI trade unwinds.

The list runs from Alphabet Inc. (NASDAQ:GOOGL) and Oracle Corp. (NYSE:ORCL) to the companies powering data centers, such as GE Vernova Inc. (NYSE:GEV), Vertiv Holdings Co. (NYSE:VRT) and Bloom Energy Corp. (NYSE:BE).

The Index Look

Source: HSBC

The Index Looks Calm. The Sectors Do Not.

• The SPDR S&P 500 ETF Trust (NYSE:SPY) is down 2.8% over the past three months. That modest number hides a sharp split.
• Over the same period, the Technology Select Sector SPDR Fund (NYSE:XLK) has fallen 9.1%, and the iShares Semiconductor ETF (NASDAQ:SOXX) has dropped 15.4%.
• Meanwhile, the Health Care Select Sector SPDR Fund (NYSE:XLV) has gained 12%
• The Consumer Staples Select Sector SPDR Fund (NYSE:XLP) has climbed 5.9%.

According to HSBC, those premiums and discounts are measured on forward price-to-earnings ratios, with tech now cheaper than the S&P 500.

“We believe the correction in equity markets has been overdone, especially in these oversold sub-sectors of the markets, including semis, capital goods,” Nicole Inui, HSBC’s head of equity strategy for the Americas, said in a note Thursday.

Some of those sub-sectors have dropped close to 20% from their peaks, even though, in the bank’s view, fundamentals remain healthy.

Oracle Shows the Widest Gap

Oracle stands out.

Stephen Bersey, HSBC’s head of U.S. technology research, has a $316 target on the stock, about 149% above Thursday’s close of $127.11.

The company reported roughly $664 billion in remaining performance obligations, or contracted revenue still to be booked, equal to 9.25 times its sales over the past 12 months.

“We continue to believe that the market is grossly undervaluing Oracle’s stock,” Bersey said.

AI Power Names Have Taken the Hardest Hit

Vertiv still sits about 45% below its May peak.

However, analyst Wesley Brooks said third-quarter organic orders more than doubled, while the stock now trades at 20.5 times 2027 earnings, a 37% discount to its three-year average.

At GE Vernova, the sell-off followed fears that gas-turbine orders had peaked. Analyst Sean McLoughlin said the company’s strong order intake challenges that view, with turbine prices more than 50% higher than a year ago.

Bloom Energy, meanwhile, has deals for 700 megawatts with Google and an initial 1.2 gigawatts with Oracle, according to analyst Samantha Hoh. Its revenue rose 145% in the first nine months of the year.

For Alphabet, HSBC highlighted that its newest model, Carbon, recorded the highest intelligence score on Artificial Analysis, an independent AI benchmark.

Applied Materials carries a $641 target. HSBC’s bull case sees the chip-equipment maker at $827.

Beyond Chips and Cloud

Freeport-McMoRan offers exposure to copper and gold, while NextEra Energy and Sempra are bets on rising electricity demand. HSBC expects U.S. power demand to climb about 50% over the next decade.

Baker Hughes and Citigroup complete the group.

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