In early 2021, the term “meme stock” conjured up images of a specific breed of equities; those with massive short positions that traders could exploit. Companies like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) became the poster children for this frenzied trading activity. However, the definition has undergone a radical shift. Today’s meme stocks are more reminiscent of traditional momentum plays, driven by internet chatroom and social media hype.
While some meme stocks still eschew traditional investment metrics, a few possess strong fundamentals. Hence, investors shouldn’t hastily dismiss all meme stocks. The following three meme stocks deserve closer scrutiny:
Advanced Micro Devices (AMD)
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Advanced Micro Devices (NASDAQ:AMD) has long been a meme stock favorite, with substantial growth in 2020 and 2021. Unlike many of its counterparts, AMD’s meteoric rise was supported by robust fundamentals. The chipmaker’s revenues soared by 45% in 2020 and surged by 68% and 44% in 2021 and 2022 respectively, culminating in an impressive 52% compounded annual growth rate (CAGR). Earnings also witnessed a noteworthy increase, from 30 cents per share in 2019 to $2.57 per share in 2021. Despite a modest dip to 84 cents in 2022, this still reflects a 41% CAGR over three years. With a nearly flawless balance sheet, AMD successfully combined substance with hype.
The company continues to benefit from the AI boom, particularly in the data center segment where sales are expected to reach $3.5 billion this year. Bolstered by its new MI300X AI chip and a platform designed to elevate customer utilization, AMD is primed to reclaim its upward trajectory.
Palantir Technologies (PLTR)
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Palantir Technologies (NASDAQ:PLTR) swiftly became a meme stock after its September 2020 IPO, with a spectacular rise from $10 to $45 per share, before enduring an 86% drop. Fast forward to the present and PLTR is now trading above $23, marking a remarkable 260% surge in the past year.
The big data firm, dubbed the “best pure-play” in AI, is set to capitalize significantly on this trend. While initially synonymous with government data analytics, Palantir is now deeply entrenched in the commercial sector. Its US enterprise segment has recorded a 70% revenue increase to $131 million in the last quarter, achieving over $1 billion in commercial revenue for the entire year. Additionally, Palantir’s introduction of a new AI platform has garnered substantial customer interest, solidifying its position as a meme stock with substance.
Super Micro Computer (SMCI)
The Soaring Success of Super Micro Computer, Inc. Stock
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A Phenomenal Ascent Amidst Meme Stock Mania
Despite a recent 7% dip, the Super Micro Computer (NASDAQ: SMCI) stock has soared an incredible 700% in the last 12 months. An ascent so impressive, it could comfortably pass for a script in the theater of meme stock mania.
But Super Micro Computer isn’t merely riding the coattails of mammoth industry trends; it’s charting a unique course driven by the unrelenting demand for rack-scale servers from cloud service providers, telecoms, and Fortune 500 companies, all seeking to fortify their data centers with AI capabilities. In this feverish pursuit, Super Micro’s server, storage, and switch hardware are fast becoming indispensable.
In Solidarity with the Semiconductor Surge
What’s more, Supermicro’s solutions are not only pivotal for data centers and edge computing but are also certified for Nvidia’s (NASDAQ:NVDA) graphics processing units. This unique positioning has aligned it with the skyrocketing trajectory of the semiconductor stock.
Amidst all this ascension, what is often overlooked is that the colossal gains made are not baseless. As witnessed with AMD, the insatiable hunger for data centers is propelling the demand for the very hardware Super Micro provides.
A Bitter aftertaste to the Rapid Surge
Nevertheless, the staggering inflation of Super Micro stock does raise concerns. Though the phenomenal rally may suggest limitless growth, any prudent investor should exercise caution and brace themselves for potential pullbacks in the share price. Navigating these lulls may offer an opportunity to acquire shares at a more attractive price point.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
