Morgan Stanley analysts have pinpointed five artificial intelligence plays they think could be winners in 2024, CNBC reports.

The key, says lead analyst Brian Nowak, is investing in companies poised to deliver substantial return on invested capital (ROIC).

“AI investments, testing and early capabilities continue to grow across the sector,” Morgan Stanely says in its client note. “But in ’24, we look for more investor focus on material incremental ROIC (revenue, engagement) from these AI investments.”

Meta (META), for instance, up a whopping 178% this year, is focusing on efficiencies and has streamlined costs in the past year, says Nowak, who believes the Facebook and Instagram owner is the dominant generative AI company in the space.

“We think Meta’s ‘year of efficiency’ is more than just a 365-day change, but, rather, a structural and cultural pivot to operate leaner and with a greater focus on investor returns … even through investment,” Nowak says.

Morgan Stanley has an overweight rating on Uber Technologies Inc. (UBER), saying of the company in its note, “Uber’s scale and liquidity gives drivers higher earnings power and riders lower wait times. [Its] platform approach allows it to rapidly expand into new business lines (Eats, Freight) and leverage shared expenses.”

Morgan Stanley’s three other top AI picks are Pinterest Inc. (PINS), ETSY Inc. (ETSY) and eBay Inc. (EBAY).

Nvidia, which was not on the investment bank’s list, reached a market capitalization of $1 trillion this year, helping fuel growth for its parent, Alphabet, and Microsoft.

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