KGI Research Singapore

Singapore's leading broker offering Futures, FX, Equities and Wealth Management.

9 November 2023: Wealth Product Ideas

Trade Idea: Tapping AI’s Potential

  • AI has become a key focus in recent tech earnings, leading to differing stock reactions.
  • Microsoft and Amazon experienced a rally, driven by optimism about their AI progress and monetization.
  • Alphabet and Meta, however, face more uncertainty despite Alphabet’s strong core ad sales.
  • Microsoft’s Azure cloud revenue growth was significantly boosted by AI demand.
  • Amazon’s AWS also experienced a growth inflection, demonstrating their leadership in utilizing AI.
  • Alphabet’s Google Cloud fell short of expectations, indicating a potential lag in AI monetization, though its ad strength showed no loss of share.
  • Meta is currently investing heavily in its AI initiatives.
  • Looking forward, AI will continue to be a critical theme. The pace of development may differ, but these tech giants are strategically focused on harnessing AI’s potential.
  • The solid 3Q2023 fundamentals highlight their resilience amid economic uncertainty.
  • The increasing importance of AI and the sustained strengths of these tech leaders support the idea of investing in this theme via structured notes (FCNs).
  • Investors have the opportunity to capitalize on AI’s long-term potential while limiting downside risks.

Note: Pricing provided is indicative only. For updated pricing, please contact us directly.

Payout Scenarios:

Investors receive corresponding interest payments every month and;

  1. KO Early Redemption: Principal + KO returns (KO event occurs only when the closing price of all underlying securities is higher than the knock-out price)
  2. Maturity Redemption: If no KO event occurs, the payout will be:
    • If the final price of all underlying is higher than or equal to the strike price, investors will receive 100% cash return on their principal, along with the final interest.
    • If the final price of one or more underlying is lower than the strike price, investors will receive 100% of their principal in the form of shares of the worst-performing stock and will also receive the final interest.

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