Bill Gates Says It's “Worth 10 Microsofts”
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Have you jumped on the AI gravy train yet? So far this year:
- Microsoft is up 36%…
- Amazon is up 62%…
- Apple is up 44%…
- Google (Alphabet) is up nearly 50%…
- And Nvidia is up a whopping 203%.
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The artificial intelligence rally started in 2023, but it still has momentum in the new year.
Perhaps no company has benefited more from the boom in generative artificial intelligence (AI) than Nvidia, which has seen its stock price rise more than 200% over the past 12 months as customers hoard its hardware to run these complex applications.
But investors don't have to put all their eggs in one basket. Let's discuss why Advanced Micro Devices (AMD) and Super Micro Computer (SMCI) could also be excellent ways to bet on the opportunity.
Advanced Micro Devices
Nvidia currently dominates the industry for AI-capable graphics processing units (GPUs), with a market share of over 80%. But with high prices and steadily growing demand, the opportunity is ripe for competition. In 2024 and beyond, AMD hopes to claim a slice of this valuable niche, potentially supercharging its long-term growth in the process.
CEO Lisa Su believes the $45 billion market for AI chips could rise to $400 billion by 2027. And her company has released its new MI300 family of GPUs designed to compete with Nvidia's flagship H100 for training and running AI applications. Management expects the products to add around $2 billion to 2024 sales.
To be fair, that's a modest sum compared to the $20.1 billion that AMD earned over the trailing 12 months. But the figure could rise to $20 billion in three years if the company maintains a share of just 5% (assuming Su's prediction of a $400 billion market comes to fruition).
Super Micro Computer
With shares already soaring by 67% in 2024, Super Micro Computer looks set to continue the rally that has sent its stock up fivefold in just 12 months. While the company is no longer as cheap as it was at the start of last year, it can benefit from the success of its hardware suppliers and its own innovations in data center modernization.
Super Micro plays an important role in the data center chip industry by turning hardware made by companies like Nvidia into consumer-ready computers that enterprises can use for data storage and running and training AI applications. The surging demand for AI chips has lifted its fortunes, with management raising fiscal second-quarter guidance from a best-case of $2.9 billion to between $3.6 billion and $3.65 billion.
Granted, Super Micro's business model makes it uncomfortably dependent on hardware supplies allocated by its partners. But as data center operations become more demanding, the company could also generate increasing revenue from its liquid cooling systems, designed to help clients prevent heat from damaging their hardware.
Analysts at Rosenblatt Securities believe this business may have played a role in Super Micro's guidance increase. And over time, it could give the company some much-needed diversification. With a forward P/E of 25, Super Micro stock is cheaper than the Nasdaq-100 index of 30, making it a relatively affordable way for investors to bet on this opportunity.
Which stock is best for you?
Advanced Micro Devices and Super Micro Computer are great ways to gain exposure to the AI hardware opportunity. But their stocks suit different investment strategies. AMD might offer more growth potential at a higher price tag, while Super Micro is a more value-oriented pick.
AI Genius Releases Groundbreaking Investment Blueprint
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For anyone who's kicked themselves for missing out on the AI boom in 2023, here's the answer. AI legend James Altucher is releasing his first-ever “AI Investing Blueprint” including the five best AI stocks to buy right now. Those five recommendations are worth watching… After all, they come from the master, James Altucher, the same man who accurately called the booms in internet stocks, the 2011 market bottom, and the crypto craze far before the wall street booms that followed. In a startling presentation, Mr. Altucher and his colleagues reveal why a massive wave of investment is heading for AI markets in the coming months and the exact steps you can take to ride the coming $15.7 trillion megaboom. He's released his presentation for free online, and we believe it's a must see for anyone invested in the stock market right now. Take a few moments to watch it below and see for yourself.
