Wells Fargo Highlights Eaton (ETN) for AI Investment Amid Geopolitical Tensions

Eaton Corporation plc (NYSE:ETN) is one of the 11 best European stocks to invest in. On June 24, Wells Fargo analysts issued a note highlighting the impact of geopolitical tensions on investment strategies. The analysts cited recent global tensions, specifically in the Middle East, with Israel accusing Iran of violating a ceasefire agreement announced by President Trump.

Wells Fargo Highlights Eaton (ETN) for AI Investment Amid Geopolitical Tensions

A skilled engineer working on a newly developed hydraulic tool with a view of the factory floor.

In the note, the analysts acknowledge that on June 23, defensive sectors, such as utilities, consumer staples, and real estate, outperformed broader markets despite concerns over Middle East conflicts. To them, the scenario suggests that investors prefer stable returns during periods of uncertainty.

Most importantly, the analysts stated that the uncertainty surrounding the potential escalation of an air war between Israel and Iran creates a favorable environment for investments in artificial intelligence (AI)-related stocks. This is because AI development is expected to continue regardless of geopolitical outcomes. To that end, the analysts identified a 25-stock basket of companies that may benefit from the investments. Eaton is among the three companies in the Electrical Equipment group. Others in this group include GE Vernova (NYSE:GEV) and Vertiv (NYSE:VRT).

Eaton Corporation plc (NYSE:ETN) is a power management company. It makes electrical, hydraulic, and mechanical systems that help manage energy efficiently and safely. Its key products include circuit breakers, power distribution equipment, hydraulics for industrial and aerospace applications, and vehicle components such as transmissions. Eaton is an American corporation domiciled in Ireland.

While we acknowledge the potential of ETN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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