“AI requires much more computing power and capabilities than previously imagined.“
— Black stone CEO Stephen Schwarzman
There is a gold rush in the field of artificial intelligence (AI). Companies that can provide the “picks and shovels” are more likely to realize wealth-building gains for their investors. This means the latest chips and related computing infrastructure that power the most advanced machine learning applications.
Here are two technology leaders providing this vital computing power. Both of these AI stocks are particularly strong buys today.
Advanced micro devices
Nvidia It's getting a lot of attention among AI chip makers. This is certainly understandable. the Semiconductors Behemoth designs cutting-edge chips that enable popular AI applications, like OpenAI's ChatGPT. But as many companies rush to reap the productivity and efficiency gains that AI promises, more of these chips are needed — and Advanced micro devices (NASDAQ:AMD) He stands ready to supply them.
AMD's revenue rose 2% year over year to $5.5 billion in the first quarter. But these sales belie the company's promising growth prospects. The chip designer's data center revenue rose 80% to $2.3 billion, as companies acquired AMD's latest graphics processing units (GPUs) and central processing units (CPUs) to power their cloud computing operations.
Revenue in the company's customer segment increased an even more impressive 85% to $1.4 billion, fueled by strong sales of the Ryzen 8000 Series AI processor. These massive growth metrics are offset by declining sales related to video games, which should rebound as console makers launch new hardware in the coming years.
Chip buyers are looking to boost competition in the supply-constrained AI semiconductor market. Tech giants love Microsoft And Meta platforms They are seizing the opportunity to deploy AMD's new MI300 accelerators, which can accelerate machine learning workloads in their data centers. Meanwhile, computer makers love HP And Dale Featuring AMD's AI-powered Ryzen processors in its latest lineup of PCs.
The opportunity in the data center market alone is enormous. CEO Lisa Su estimates that demand for AI accelerators could rise to $400 billion by 2027. For context, AMD expects data center chip sales to reach nearly $4 billion in 2024.
Super micro computer
Strong demand for AI chips also drives sales of supporting computing hardware, which is good for us Super micro computer (NASDAQ: SMCI). The provider of high-performance servers, data storage systems and other AI-optimized equipment is enjoying impressive growth. However, today, you have the opportunity to buy its shares at a significant discount from their recent highs.
Supermicro (as it's commonly called) saw its sales triple to $3.85 billion in the quarter ended March 31. Its net profits rose 367% to $402 million. Supermicro wins market share in fast-growing AI infrastructure market. The server specialist has close ties to Nvidia, so it disproportionately benefits from the intense demand for the chipmaker's AI offerings.
However, despite its impressive growth metrics, Supermicro shares have fallen from the prices they reached earlier this year. The stock is now down about 35% from its all-time highs. Shares are trading at roughly 33 times 2024 adjusted earnings per share forecasts. That's a good deal for an AI hardware leader that's expected to grow earnings per share more than 60% annually over the next five years.
Investing in high-quality companies that are set to benefit from the AI revolution when their shares are temporarily on sale is a smart wealth accumulation strategy. Today, you have such an opportunity with Super Micro Computer.
Should you invest $1,000 in Super Micro Computer now?
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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Joe Tenbroso He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Blackstone, HP, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure policy.
2 Artificial Intelligence (AI) Stocks You Can Buy Right Now That Could Make You a Fortune Originally published by The Motley Fool