HomeMarket NewsThe Surge of Artificial Intelligence (AI) Stocks: Untapped Potential Ahead

The Surge of Artificial Intelligence (AI) Stocks: Untapped Potential Ahead

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Artificial intelligence (AI) stocks are making waves in the stock market, with the AI revolution being the dominant force behind the new bull market. Companies like Nvidia, renowned for its graphics processing units (GPUs) that underpin AI models such as ChatGPT, are reaping the benefits.

Unleashing the Power of Super Micro Computer

When it comes to stock performance, Super Micro Computer (NASDAQ: SMCI) has set a remarkable benchmark by achieving an over 800% surge over the past year. Specializing in high-density servers ideal for AI applications, the company is witnessing an unprecedented demand for its servers and storage solutions.

The incredible growth trajectory of Super Micro Computer continues, with a staggering 103% revenue increase in its latest quarter. Despite supply challenges, the company is excelling by collaborating closely with Nvidia to craft tailored servers for its AI clientele.

CEO Charles Liang highlighted the persistent supply-demand gap, hinting at even greater potential if the supply situation improves – a reality that seems to be materializing. With a modest price-to-earnings ratio and robust growth prospects, the stock appears undervalued, paving the way for further expansion in the realm of generative AI.

The Ascendancy of Micron in AI Realm

On the other hand, Micron Technology (NASDAQ: MU), a key player in DRAM and NAND memory chips, has witnessed an impressive 103% uptick in its stock value over the past year. While not as meteoric as Super Micro Computer’s rise, Micron showcases significant potential for further growth.

Micron’s upward trajectory is propelled by the shifting dynamics in the chip sector, as reflected in its recent second-quarter earnings. With a 58% revenue surge and a turnaround from losses to profits, Micron is embracing the AI wave as a pivotal force for demand. CEO Sanjay Mehrotra emphasized Micron’s advantageous position in the semiconductor industry, foreseeing a profitable future driven by the AI wave.

The company anticipates sustained growth in high-bandwidth memory and data center solid-state drives, driven by AI server demand, leading to constrained chip supply and escalating prices. Micron’s strategic forecasts project record revenue in fiscal 2025, underpinned by improved profitability standards.

Amidst its competitive pricing and expanding market opportunities, Micron is poised to ascend further in the AI chip landscape, with a potential for a monumental stock surge.

Jeremy Bowman holds no position in the mentioned stocks. The Motley Fool has corporate interests and endorsements involving Nvidia. The Motley Fool observes a disclosure policy.

The expressed views are those of the author and may not align with Nasdaq, Inc.’s perspectives.

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