Artificial Intelligence Stocks on the Rise: Super Micro Computer and Nvidia
The artificial intelligence (AI) revolution is in full swing, and Wall Street is taking notice. Two AI stocks, Super Micro Computer (SMCI) and Nvidia (NVDA), have seen their shares surge 650% and 1,030%, respectively, over the last two years. Despite this impressive growth, analysts believe that these stocks still have room to run.
Super Micro Computer: A Leader in AI Servers
Super Micro Computer is a leading manufacturer of high-performance computing platforms, including servers and full server racks, optimized for AI. The company’s ability to bring new products to market quickly has allowed it to stay ahead of the competition. According to Rosenblatt analyst Hans Mosesmann, “Super Micro has developed a model that is very, very quick to market. They usually have the widest portfolio of products when a new product comes out.”
Nvidia: The Foundation of the AI Revolution
Nvidia is a leader in the field of artificial intelligence, with its graphics processing units (GPUs) powering the most advanced AI systems. The company’s CUDA ecosystem of software tools allows developers to write GPU-accelerated applications across numerous domains, from computational chemistry to machine learning. Nvidia’s full-stack computing platform, which spans hardware, software, and services, has secured a leadership position in generative AI networking equipment.
Growth Prospects
Analysts expect Super Micro Computer’s earnings to increase 54% over the next 12 months, making its current valuation of 21.7 times adjusted earnings look quite cheap. Nvidia’s adjusted earnings are expected to increase 54% over the next year, making its current valuation of 63.3 times adjusted earnings look fair.
Risks and Opportunities
While both stocks have significant growth potential, there are also risks to consider. Super Micro Computer has faced regulatory issues in the past, including a fine for accounting manipulation in 2020. Nvidia’s stock is not cheap, and investors should be aware of the potential for volatility.
Conclusion
Despite the risks, both Super Micro Computer and Nvidia are well-positioned to benefit from the growing demand for AI infrastructure. With their strong track records and significant growth potential, these stocks are worth considering for investors looking to get in on the AI revolution.
Price Targets
- Super Micro Computer: $67.50 per share (41% upside from current price)
- Nvidia: $150 per share (7% upside from current price)
Recommendation
Based on the analysis, we recommend buying a small position in both Super Micro Computer and Nvidia. While there are risks to consider, the potential rewards make these stocks an attractive addition to any portfolio.
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