This article delves beyond basketball to introduce three remarkable stocks for March investment. Forget buzzer-beaters and brackets; this March Madness revives your portfolio with the magic of artificial intelligence (AI).

The expanding applications of AI across industries forecast a remarkable 37.3% compound annual growth rate (CAGR), propelling the global AI market towards a whopping $2 trillion by 2030. Discerning investors seek out stocks poised to ride this tidal wave of growth.

However, the key is not in chasing traditional AI behemoths. Instead, we uncover three underrated players quietly profiting from AI’s proliferation in their niche domains. These three stocks present an opportunity for lucrative returns as AI continues to reshape our reality.

Celestica (CLS)

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Our first stock pick, Celestica (NASDAQ:CLS), stands out as a premier electronics manufacturing services (EMS) firm crafting tailor-made hardware for clients across diverse sectors. Celestica impressed with robust fourth-quarter and full-year financials released in late January. A 5% year-over-year (YOY) revenue surge to $2.14 billion, alongside a 36% boost to adjusted earnings per share (EPS) to 76 cents, underscored its commendable performance. The Connectivity & Cloud Solutions arm drove this success, buoyed by hefty demand for bespoke hardware solutions from hyperscaler clientele.

Celestica’s smart investments in AI, machine learning, and cloud solutions position it as an EMS leader. Management anticipates sustained momentum into 2024, with robust revenue growth and an improved product mix earmarked as the main growth drivers.

Consequently, CLS stock has soared over 55% year-to-date (YTD), building on a 150% surge in 2023. Despite this impressive trajectory, shares are trading below sector median multiples at 15.2 times adjusted forward earnings and 0.7 times trailing sales. Astute long-term investors may perceive any potential dip in the CLS stock price as a gateway to tap into the flourishing AI hardware market.

Dell Technologies (DELL)

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IT stalwart Dell Technologies (NYSE:DELL) emerges as a top contender in our March stocks-to-buy roster. Its focus on AI and on-premise deployments situates it favorably within the burgeoning AI server market, projected to swell to $150 billion by 2027.

Dell recently unveiled impressive earnings, surpassing analyst projections with a robust 22% year-over-year (YOY) upswing in EPS, despite a marginal revenue dip. Notably, the deferred revenue surged to $30.3 billion, highlighting strong customer commitments. These metrics underscore the vigor of their AI strategy. Dell currently furnishes an expansive AI server portfolio tailored for the rigorous demands of advanced AI applications like machine learning and natural language processing. Management acknowledges the mounting significance of multi-cloud and edge-computing

Here’s the kicker: despite a 40% year-to-date surge, DELL stock still trades at an appealing valuation — 14.4 times forward earnings and 1.0 times trailing sales. Furthermore, Dell’s board recently upped the dividend by 20% and committed.

Investing in AI through VanEck Semiconductor ETF (SMH)

AI Chip Market Opportunity

For investors looking to capitalize on the AI boom without the risk associated with individual stocks, the VanEck Semiconductor ETF (SMH) presents a compelling option. This ETF, listed on NASDAQ under the ticker symbol SMH, provides exposure to the burgeoning AI chip market, offering a diversified portfolio of companies driving innovation in artificial intelligence.

Concentrated Fund Strategy

Serving as a one-stop shop for investors seeking exposure to the AI chip market, SMH boasts a concentrated fund strategy with its top 10 holdings representing nearly 74% of its $19.15 billion net assets. Key players in the fund include industry giants such as Nvidia (NASDAQ: NVDA), Taiwan Semiconductor Manufacturing (NYSE: TSM), Advanced Micro Devices (NASDAQ: AMD), Broadcom (NASDAQ: AVGO), and ASML (NASDAQ: ASML), pivotal in advancing AI technology.

Market Growth Potential

With artificial intelligence revolutionizing various industries, the demand for robust AI chips is set to soar. VanEck’s Semiconductor ETF acknowledges this growth potential, pointing towards strong indicators for sector expansion beyond 2024.

Performance and Dividend Yield

Investors in SMH have enjoyed substantial returns, with the ETF delivering a 30% increase year-to-date and an impressive 81% growth over the last year. Moreover, SMH offers a dividend yield of 0.48%, further enhancing its value proposition. It’s important to note that the expense ratio stands at a competitive 0.35%.

Full disclosure: The author of this article has both long and short positions in NVDA stock as of the publication date. The opinions expressed are solely those of the writer and adhere to the InvestorPlace.com Publishing Guidelines.

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