2 No-Brainer Artificial Intelligence (AI) Stocks to Buy Now

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Savvy investors know that buying the stocks of companies that are providing “picks and shovels” when there’s a gold rush is a proven wealth-building strategy. When it comes to the artificial intelligence (AI) boom, it’s the computing infrastructure that makes game-changing technology possible. Think chips and computer servers instead of pickaxes and sifting pans.

If this low-risk investment approach sounds appealing, read on to learn about two leading AI infrastructure providers with particularly attractive growth prospects. Both their stocks are interesting buys today.

1. Arm Holdings

30.6 billion chips shipped in its 2023 fiscal year alone, Arm Holdings(NASDAQ: ARM ) Access extends to almost every technology-focused market. From personal computers (PCs) and data centers to smartphones and autonomous vehicles, demand for Arm’s energy-efficient semiconductor technology is skyrocketing.

Many leading chipmakers develop their products using the ARM architecture. In September, apple extended its partnership with Arm, allowing the tech titan to incorporate Arm’s intellectual property into custom-designed chips for its popular iPhones and Macs through at least 2040. In November, Microsoft announced that its cloud computing services will provide access to the new ARM-based chips. And in March, Nvidia Launched its powerful Blackwell High Performance Computing Platform including ARM processors. All told, Arm estimates that 70% of the world’s population uses products made with its technology.

Additionally, thanks to its chip architecture’s combination of performance, efficiency, and cost-effectiveness, Arm is gaining market share in all of its key markets.

Image Source: Arm Holdings

This growing market share is driving Arm’s sales and profits tremendously. Revenue rose 14% to $824 million in the quarter ended Dec. 31, while adjusted net income rose 36% to $305 million.

High spending on AI solutions is fueling ARM’s growth. “We’re seeing demand for ARM technology to enable AI everywhere, from the cloud to the devices in your hand,” CEO Rene Haas and CFO Jason Child said in a letter to shareholders. up to.”

Arm sales, in turn, are likely to accelerate. The company expects its revenue to grow by 42% in its fiscal fourth quarter.

“We believe AI is the most profound opportunity of our lifetimes, and we’re just getting started,” Haas said in an interview with Bloomberg in February.

2. Super microcomputer

It’s not just chipmakers that are benefiting from the AI ​​gold rush. Demand for high-performance servers, data storage systems, and other AI-focused computing infrastructure is increasing. Super Microcomputer (NASDAQ: SMCI ) is helping to provide its customers with the innovative hardware solutions they need to power their AI ambitions — and business is booming.

Server Specialist has close ties to Nvidia. In turn, unsatisfied demand for Nvidia’s latest processors is also boosting sales of the ancillary computing hardware that Supermicro (as the company is also known) provides.

Super Micro’s sales rose 103 percent year-over-year to $3.7 billion in the second quarter of fiscal 2024, which ended Dec. 31. Better yet, the company’s net income rose 68 percent to $296 million, even as it spent aggressively to ramp up production.

That strong performance, combined with encouraging ongoing sales trends, led management to raise its full-year revenue estimate to $14.3 billion to $14.7 billion, up from a previous estimate of $10 billion to $11 billion. That will more than double the company’s sales of $7.1 billion in fiscal 2023.

Additionally, Super Micro’s share price has retreated from its recent highs following the stock offering in March. But the stock sale raised about $1.7 billion, which the company can now use to bolster its manufacturing network and fund its other expansion initiatives.

These growth investments should pay off for Super Micro’s shareholders. According to Global Market Insights, the market for AI servers will exceed $177 billion by 2032, up from $38 billion in 2023. Investors who buy SuperMicro shares at a discount today should be well rewarded as it works to meet strong demand for its AI tools.

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

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Joe Tenebrosso has no position in any stocks. The Motley Fool holds positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a Disclosure Policy.

2 No-Brainer Artificial Intelligence (AI) Stocks to Buy Now was originally published by The Motley Fool.

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