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2 Millionaire-Maker Artificial Intelligence (AI) Stocks

by CoinNews
written by CoinNews

Artificial intelligence stocks have already made plenty of millionaires.

After all, Nvidia alone added nearly $2 trillion in market cap since the start of 2023, and there have been trillions of dollars in market value created among the “Magnificent Seven” and beyond.

However, according to industry insiders, artificial intelligence is still in its infancy, and some have likened the current phase to the dial-up stage of the internet. Like the internet in the 1990s, generative AI is going to get better, and its applications will proliferate in ways that are hard to foresee.

To capitalize on that trend, keep reading to see two AI stocks that are worth buying right now.

An AI chip in the middle of a circuit board.

Image source: Getty Images.

1. Super Micro Computer

One of the biggest winners in the AI boom so far has been Super Micro Computer (SMCI 2.69%), a maker of servers and storage equipment that works especially well for artificial intelligence purposes.

Shares of Supermicro, as the company is often known, jumped more than 800% over the past year as the company has emerged as a clear leader in AI hardware. Revenue rose 103% in its fiscal second quarter, and management said that its growth rate would accelerate in the next two quarters as it called for 101% to 107% revenue growth for the full fiscal year.

Comments from management indicate that the company could be growing even faster if it wasn’t facing supply constraints. CEO Charles Liang said that while GPU supply is improving, “Indeed, the demand is still stronger than supply. If we had more supply, we would be able to ship more.”

Supermicro also has a close relationship with Nvidia, whose GPUs have become the technological foundation of the AI boom — Nvidia has greater than a 90% market share in the data center GPU market. The headquarters of both companies are nearby, and its engineers work together to design server systems that fit the needs of its different customer groups.

That gives Supermicro a competitive advantage, as does its prowess in offering more customization options than its competitors, and it’s also known for bringing products to market faster.

Supermicro trades at a reasonable price-to-earnings ratio of less than 50 based on this year’s estimate, and it has a market cap of $59 billion. If the company remains a leader in AI servers, the stock could turn $250,000 into $1 million over the coming years.

2. Micron

Memory-chip specialist Micron (MU 5.44%) emerged as another big potential winner in AI as memory chips play an important role in running the kind of models that make programs like ChatGPT work.

Unlike stocks like Supermicro and Nvidia, investors are only starting to catch on to Micron’s growth opportunity in AI, and the stock is still affordably priced at a price-to-sales ratio of 4.

Micron is just emerging from a downturn in the chip industry as a supply glut driven by a slowdown in PC and tablet sales coming out of the pandemic has weighed on prices. However, artificial intelligence is playing a key role in its comeback. CEO Sanjay Mehrotra told investors in the recent earnings call, “We are in the very early innings of a multiyear growth phase driven by AI as this disruptive technology will transform every aspect of business and society.” He added, “Memory and storage technologies are key enablers of AI in both training and inference workloads, and Micron is well positioned to capitalize on these trends in both the data center and the edge.”

Micron’s products also stand out from the competition. For example, its high-memory HBM3E solution provides more than 20 times the memory bandwidth compared to standard server modules and it consumes 30% less power, an important quality in AI hardware, than competing products.

The company now expects record revenue in fiscal 2025 and a significant improvement in profitability. Based on that momentum and its leadership in memory chips, Micron could also grow by four times over the coming years from its current market cap of $130 billion, turning $250,000 into a million dollars.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

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3 Millionaire-Maker Technology Stocks | The Motley Fool

by CoinNews
written by CoinNews

There are plenty of great stocks to own. Not every great stock, however, is necessarily the kind of company that turns ordinary investors into outright millionaires.

With that as the backdrop, here’s a rundown of three tickers that have either already made a bunch of people millionaires, or could do so in the foreseeable future. Don’t sweat the fact that all three of them are technology stocks. The sector is home to the market’s most rewarding stocks, after all. These companies are at the heart of the world’s biggest and best changes.

ASML

You may not be familiar with ASML (ASML 1.79%), but there’s a very good chance you’re a regular user of its tech. The company makes equipment that semiconductor manufacturers need to mass-produce computer chips.

It’s called lithography, or in ASML’s case, extreme ultraviolet (or EUV) lithography. In simplest terms, lithography is the process of using light to “etch” a semiconductor into existence. This approach allows for the creation of much smaller circuitry than traditional mechanical approaches to chipmaking, making these chips faster and more energy efficient.

Here’s the thing — the semiconductor industry desperately needs this tech, and is wildly reliant on ASML for it. Credit rating and investment research firm Moody’s estimates the company controls more than 80% of the lithography equipment market, and nearly all of the world’s EUV lithography market. Between its patent protection and the sheer cost of entering the business, ASML is capable of keeping all serious competitors at bay.

That doesn’t mean the company is immune to challenges. It too was caught up in the semiconductor crunch stemming from the COVID-19 pandemic, for instance. Economic weakness could prevent chipmakers from investing in new extreme ultraviolet lithography equipment in the future. Never say never.

Take a step back and look at the bigger picture, though. There’s never going to come a time when the world stops using technology. If anything, we’re going to continue becoming even more reliant on tech. In this vein, Precedence Research believes the worldwide semiconductor market will grow at an annualized pace of more than 12% through 2032. A huge chunk of that growth will be made using ASML’s lithography equipment.

Palantir Technologies

You’re certainly aware that artificial intelligence is now in the mainstream. You may have even tinkered with Google’s AI platform called Bard, or OpenAI’s ChatGPT. What you may not have figured out yet is how such technologies can be commercialized.

Enter Palantir Technologies (PLTR 2.32%).

Simply put, Palantir’s business is “powering AI-assisted decision making, from war zones to factory floors.” The company explains, “We build category-leading software that empowers organizations to create and govern artificial intelligence — across public and private networks.”

Take its Foundry platform as an example. Utility company PG&E used Foundry to optimize its power grid, even allowing it to develop a preventive (predictive) maintenance program. Energy giant BP‘s automotive oil brand Castrol tapped Foundry to better buffer itself from supply chain shocks. A different Palantir Technologies service is being utilized by the U.S. military to improve soldiers’ situational awareness and optimize the combat readiness of equipment. Still another Palantir platform is helping prevent money laundering. The sky’s the limit as to what Palantir’s tech can do.

And Palantir is very, very good at what it does. Dresner Advisory Services ranked the company as the No. 1 AI, data science, and machine learning vendor for 2023.

For investors, though, the crux of the bullish argument isn’t just a superior, highly marketable product. It’s the nature of the business model itself. See, Palantir doesn’t sell systems. It sells perpetual access to artificial intelligence solutions, translating into predictable recurring revenue. The company just needs to focus on adding paying customers.

And it’s doing just that. Last year’s top line is on pace to swell to the tune of 17%, with analysts calling for revenue growth acceleration to nearly 20% this year. Better still, given the AI industry’s long-term growth prospects, analysts believe those numbers reflect the company’s probable growth pace for at least the next several years.

Super Micro Computer

Last but not least, add Super Micro Computer (SMCI 35.94%) to your list of millionaire-maker technology stocks.

As far as tech companies go, Super Micro Computer isn’t exactly an innovator or developer. Rather, it uses high-performance technology made by companies like Advanced Micro Devices and Nvidia to offer complete suites of server and data center equipment that’s increasingly needed by all kinds of companies. Most of this demand is being driven by the growing interest in AI solutions. Super Micro Computer simply handles an important but less-featured aspect of the AI industry.

The barrier to entry into the business isn’t especially high. Nevertheless, Super Micro Computer remains one of the go-to names — if not the top name — in the data center establishment arena. The fact that it’s founder-led may have a great deal to do with that. CEO Charles Liang is a terrific leader, with bachelor’s and master’s degrees in electrical engineering, so he also understands exactly what’s happening in digital computing. 

The company is still relatively small, too, with a market cap right around $20 billion. That leaves it nimble enough to move quickly — perhaps more quickly than its customers could move on their own were they interested in assembling their own tech racks.

Whatever the reason, the company’s growth numbers speak for themselves. Super Micro Computer’s top line is projected to swell by nearly 50% this fiscal year as the world rushes to establish and then utilize AI capabilities. That growth is a tough act to follow. Still, analysts expect Super Micro Computer’s revenue to more than double over the course of the coming five years. Profits should grow accordingly.

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This Rebellious AI Stock Could Be a Millionaire-Maker

by CoinNews
written by CoinNews

Growth investors often dream of becoming millionaires with a modest investment. They often hope to find the next Home Depot or Amazon before they become widely known, leading to outsized returns.

Finding such stocks is easier said than done, and promising growth stories often get derailed. However, one possible stock with such potential is Super Micro Computer (SMCI -1.09%).

What is Super Micro Computer?

Super Micro has existed for more than 30 years and has become a leading manufacturer of servers. The company bills itself as a “rack-scale” IT solutions provider. Along with servers, it produces switches, storage units, and high-end software services.

The rise of artificial intelligence (AI) has made it more critical for hardware and software to work together. That combined need plays into the hands of Super Micro, as most of the largest tech companies specialize in either hardware or software.

The company also adds additional attributes to gain an advantage. It boasts a customer base in more than 100 countries and controls around 6 million square feet of manufacturing space worldwide. Additionally, it designs environmentally friendly products focused on energy savings, an attribute that may add to its competitive advantages.

Super Micro’s path to growth

Nonetheless, investors have begun to catch on to the company’s potential, taking the AI stock about 300% higher over the last year. Consequently, its market cap now stands at about $18 billion, which means it holds a somewhat reduced potential to mint millionaires than a year ago.

Still, it’s likely not too late to invest. A 100-fold increase would leave it with a market cap comparable to some of its mega-tech competitors. Also, Grand View Research forecasts the data center market will reach $437 billion by 2030. That compound annual growth rate amounts to 11%, which probably leaves it with considerable room for growth.

Admittedly, growth may have taken a breather, as Super Micro’s revenue in the first quarter of fiscal 2024 (ended Sept. 30) was $2.1 billion, a yearly increase of 14%. In fiscal 2023, revenue rose 37% year over year.

Super Micro has increased research and development spending, as well as outlays on sales and marketing. Thus, its fiscal Q1 net income fell to $157 million, versus $184 million in the year-ago quarter. Still, profits grew by 125% in fiscal 2023, and the Q1 pullback looks temporary.

The company raised fiscal 2024 revenue guidance to a range of $10 billion to $11 billion. At the midpoint, that would amount to a 47% revenue increase if that prediction holds.

Moreover, its price-to-earnings ratio (P/E) is about 31, a low valuation considering the fiscal 2023 earnings growth. Furthermore, its price-to-sales ratio (P/S) is only 2.5. This compares well to Nvidia or Microsoft, with sales multiples well into the double digits. This could imply tremendous upside once more investors see Super Micro’s growth potential.

SMCI PS Ratio Chart

SMCI PS Ratio data by YCharts.

Super Micro as a millionaire-maker

Despite massive growth over the last year, Super Micro continues to have potential as a millionaire-maker. Thanks to AI, the need for servers where the hardware and software work seamlessly together is more critical than ever, and Super Micro is one of the few companies to combine those attributes explicitly.

Moreover, the $18 billion market cap takes it barely into large-cap territory, leaving tremendous potential for massive growth as AI adoption increases. Assuming the latest quarter is likely a temporary setback in Super Micro’s growth plans, investors could make massive gains by buying this growth name at a low valuation.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Home Depot, Microsoft, and Nvidia. The Motley Fool recommends Super Micro Computer. The Motley Fool has a disclosure policy.

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3 Millionaire-Maker Artificial Intelligence (AI) Stocks

by CoinNews
written by CoinNews

For years, you were more likely to find artificial intelligence (AI) in a science fiction story than in the day’s headlines. Now, all that has changed.

Increasingly, the world is turning to AI to solve our most complex problems. And as a result, the corporate world is racing to build better and more fantastic AI-powered tools.

The prize for winning? Billions of dollars in profit and millions more for investors. So, let’s have a look at three AI stocks with millionaire-making potential.

A person holds a smartphone under a digital web of icons related to artificial intelligence.

Image source: Getty Images.

Advanced Micro Devices

Advanced Micro Devices (AMD -0.35%)is one of the world’s premier semiconductor corporations. Long known as a designer of semiconductors for personal computers (PCs), gaming devices, and servers, AMD is directly challenging Nvidia‘s dominance of the AI chip market by introducing its new MI300 series of chips.

Although it’s still to be determined whether AMD can take significant market share from Nvidia, it is clear that both companies have plenty of room in the lucrative AI market. Indeed, in an interview last month, AMD CEO Lisa Su said as much herself, noting: “There are going to be multiple winners in this market … customer demand is very high. We continue to work with our customers to deploy as quickly as possible.”

In turn, expectations are rising. Wall Street now expects AMD to grow revenue 17% over this year to $26.4 billion — an all-time high. Earnings per share (EPS) are also expected to soar to $3.75 per share, up 42%.

Palantir Technologies

Palantir Technologies (PLTR -0.66%), the Denver-based software company, is at the forefront of big data analytics. Palantir caters its services to organizations awash in data. And in today’s world, the number of those organizations is rising rapidly.

Indeed, Palantir counts many governments, hospitals, banks, pharmaceutical companies, and educational institutions among its clients.

The company uses AI to help clients sift through data, look for trends, and spot patterns. While much of the company’s defense work — roughly 50% of revenue — is understandably opaque, the other 50% is commercial. Examples include helping hospitals create dynamic schedules for staff and driving operational efficiencies for transportation companies.

Palantir recorded $2.1 billion in revenue over the last 12 months, with quarterly revenue increasing by 17% year over year. What’s more, analysts expect sales to accelerate in 2024. According to estimates, Palantir’s revenue should rise to $2.7 billion, up 20% from last year.

PLTR Chart

PLTR data by YCharts

Nevertheless, Palantir is not for every investor. While the company is profitable, its lofty valuation (shares trade with a price-to-earnings multiple above 200) will put it out of reach for value-oriented investors, and the company pays no dividend, making it unappealing for those seeking income from their investments.

However, for those investors looking for a growth stock with solid fundamentals and a long runway of growth ahead of it, Palantir is a stock worth considering.

Microsoft

Microsoft (MSFT 0.49%) rounds out my list of millionaire-maker AI stocks. The company, which is now neck and neck with Apple as the world’s largest company by market cap, may benefit more than any other organization from the AI revolution.

First off, the company’s close partnership with ChatGPT maker OpenAI has grown even closer in the weeks since OpenAI CEO Sam Altman was fired and then rehired. A new OpenAI board of directors is taking shape, with reports naming Microsoft Vice President Dee Templeton as a new “observing” board member.

In other words, Microsoft’s influence at OpenAI continues to grow stronger, which puts the company in a strong position to commercially benefit from further AI innovations that OpenAI may develop.

Second, Microsoft’s size and scale mean it can quickly deploy new generative AI features into its well-known and widely used software. Microsoft’s Office suite and, increasingly, its Bing search engine already incorporated many AI features. In the coming years, expect Microsoft to roll out even more awe-inspiring generative AI tools. For all those reasons — along with other non-AI reasons — Microsoft remains a corporate juggernaut.

Granted there are some concerns about Microsoft right now. Chief among them, the price of its shares. Some investors may balk at the company’s hefty valuation — shares trade well above the stock’s long-term average price-to-sales ratio.

MSFT PS Ratio Chart

MSFT PS Ratio data by YCharts

Yet, for the truly long-term investor, who is likely dollar-cost averaging, any time is a good time to buy a great company. And, to me, there is little doubt that Microsoft is exactly that.

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