2 Artificial Intelligence (AI) Stocks Up 2,220% in 15 Years and 10,740% to Buy Now

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Shares of Super Microcomputer (NASDAQ: SMCI ) And Intuit (NASDAQ: INTU ) 10,740% and 2,220% increase in last 15 years respectively. The price increase qualifies both companies as candidates for a stock split in 2024. More importantly, it tells investors that companies must be doing something right. This kind of performance doesn't happen by accident, and winners keep winning. Famous investor Peter Lynch once said, “You want to let the winners run.”

Here's why Supermicro and Intuit are worthwhile investments, whether or not the companies issue stock splits this year.

Supermicrocomputer: The market leader in artificial intelligence servers

Super Microcomputer makes high-performance servers and storage systems for enterprise and cloud data centers. Its products range from individual devices to complete rack-scale solutions. The company sources chips, memory, interconnects, and other hardware from suppliers such as Intel And AMDand is particularly closely related to it. Nvidia.

Super Micro has differentiated itself through modular product development and in-house engineering. In particular, it makes server building blocks that can be quickly equipped with the latest chips and hardware, and it handles much of the design and manufacturing in-house. These qualities often allow Super Micro to bring new products to market ahead of its peers. In fact, management expects to be the first to market with computing platforms that include the latest Nvidia Blackwell graphics processing units (GPUs).

Another benefit of modular product development is that the server building blocks can be assembled in countless combinations, such that Supermicro typically offers a wider selection of server and storage products than its contemporaries. In other words, the company offers its clients greater flexibility in designing customized computing solutions.

Supermicro is by no means the leader in the server space. Dell Technologies He holds the title. But the company has taken an early lead in the artificial intelligence (AI) server market and is rapidly gaining market share. KeyBanc analysts estimate the company will account for 23% of AI server sales by the end of 2024, up from 10% at the start of the year.

Supermicro reported strong financial results in the third quarter of fiscal 2024 (ended March 31). Revenue increased 200% to $3.8 billion, and non-GAAP (generally accepted accounting principles) net income increased 308% to $6.65, driven in particular by strong demand for GPU-accelerated AI platforms. Management also raised its full-year guidance, up from 104% forecast for revenue growth of 110% at the midpoint.

Going forward, Wall Street expects Super Micro to grow earnings per share by 47% annually over the next three to five years. If we divide this number by its current price-to-earnings ratio of 40.5 times non-GAAP earnings, the result is a very reasonable price/earnings-to-growth (PEG) ratio of 0.9. At this price, I think the Super Micro is positioned to outperform. S&P 500 In the next three to five years.

Intuit: An artificial intelligence-powered expert platform

Intuit is the market leader in US tax preparation (TurboTax) and accounting software (QuickBooks). It also owns personal finance platform Credit Karma and marketing platform MailChimp. Five years ago, Intuit began redefining itself as an artificial intelligence-powered expert platform and doubled down on expanding its small business ecosystem with ancillary services, such as payroll and payment processing. done

Since then, Intuit has launched live versions of TurboTax and QuickBooks, which let users engage with tax and bookkeeping experts. The company also introduced a generative AI assistant (Intuit Assist) that answers tax questions and makes recommendations in TurboTax, reveals financial insights in QuickBooks, and helps small businesses optimize marketing campaigns in Mailchimp. helps to make When appropriate, Intuit Assist also directs customers to supporting and full-service tax preparation and bookkeeping solutions.

Intuit looked strong in the third quarter of fiscal 2024 (ended April 30), beating expectations on the top and bottom lines. Revenue rose 12% to $6.7 billion, an acceleration from last year's 7% growth. This was due to particularly good numbers in the small business and self-employed product category, which includes MailChimp, QuickBooks, and related services. Meanwhile, non-GAAP net income rose 11% to $9.88 per diluted share.

Management also raised its full-year guidance. Revenues are now estimated to grow 13%, up from 11% to 12%, reflecting a more confident outlook across all product categories, particularly the small business and self-employed segments. Additionally, non-GAAP earnings per share are expected to increase 17% from 12% to 14%.

Going forward, Wall Street expects Intuit to grow earnings per share 17% annually over the next three to five years. That makes its current 34.5 times non-GAAP earnings look reasonable. Additionally, shares currently trade at 32.1 times free cash flow, a discount to the three-year average of 37.3 times free cash flow.

Intuit has greatly underperformed the S&P 500 over the past three years, but I think the stock could outperform its current valuation over the next three to five years.

Should you invest $1,000 in a supermicrocomputer now?

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Trevor Genuine has positions in Nvidia. The Motley Fool has positions and recommends Advanced Micro Devices, Intuit, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel and short August 2024 $35 calls on Intel. The Motley Fool has a Disclosure Policy.

Potential Stock Dividends in 2024: 2 Artificial Intelligence (AI) Stocks Up 2,220% and 10,740% in 15 Years to Buy Now was originally published by The Motley Fool.

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