This new S&P 500 artificial intelligence (AI) stock is growing 5 times faster than its industry.

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The company works closely with the world's biggest AI players.

Artificial intelligence (AI) has generated a lot of excitement in the investment community — and for good reason. Technology has what it takes to reshape every industry and our daily lives, so a real revolution is likely ahead. And giants in the field, from the alphabet To Chief Executive Officer Sundar Pichai Nvidia CEO Jensen Huang says AI could represent a big change from the Internet.

AI promises faster new and better medicines, for example, and greater efficiency in business and in our daily lives. The conversational assistants that have been released in recent days may be just the beginning. And analysts predict that the AI ​​market could exceed $1 trillion by the end of the decade, suggesting that we are indeed in the early days of this growth story.

Today is the best time to join the players who can stand out in this exciting industry. Recently, the S&P 500 Recognized by inclusion in the index — confirmation that it is one of the most valuable publicly traded companies today. AI is making explosive progress for this particular player, and the company has grown five times faster than its industry in the past 12 months. Read on to know more.

Image source: Getty Images.

30 years old company

Many companies today can be considered AI players — those that make chips and components or sell AI services to people who are using the technology to improve their businesses or innovate. What the S&P 500 recently welcomed isn't new to the region — the company recently celebrated its 30th anniversary. But this player's business, after slow and steady growth over time, took off alongside the AI ​​boom, thanks to its business with AI users.

I'm talking. Super Microcomputer (SMCI 12.44%), a developer of workstations, servers, full-rack scale solutions, and other equipment that powers data centers and AI projects. The company recently reported its first $3 billion quarter — the amount it made a year ago in 2021. And the stock has gained 2,000 percent in three years.

As mentioned, Supermicro has posted growth that has beaten the industry average over the past year, and now the questions are: “Why?” and “Can it go on?”

First, a look at why Super Micro has been so successful. The company has had a few decades to build its capabilities and expertise, so now, with demand for AI increasing, it's ready to deliver.

In addition, consumers are looking for Super Micro devices for two specific reasons. The company's building block technology — with common elements used across all product lines — helps each product quickly adapt to customer needs. And Super Micro works closely with chip makers such as Nvidia, IntelAnd Advanced Micro Devices So that its devices include their latest chips.

Record demand in recent quarters

A user can quickly acquire the latest technology and tailor it to his particular project. This is a huge plus and has obviously attracted customers with AI plans to the Super Micro. The company has reported record rack-scale demand for its AI systems in recent quarters, including chips made by the world's top players.

Now consider whether this demand can continue? The common development environment should serve as a tailwind for SuperMicro as more companies start and scale AI projects in the coming years. So background is positive. Supermicro's approach to constructing building blocks and working with chipmakers should also remain favorable, and the company is ramping up production at a new factory in Malaysia with a focus on lower costs and higher volumes.

Finally, Super Micro could win thanks to the development of its Direct Liquid Cooling (DLC) technology. AI data centers are heat intensive, so the need for a green and efficient cooling system is high. This could be the next growth driver for Super Micro. The company expects its DLC systems to take a 30% market share in the next two years. The Taipei Times reported citing Super Micro's presentation at the Computex event. This is after going from zero market share to less than 1% over the past three decades.

All of this means that this new S&P 500 AI company could continue to grow faster than its industry — and that sounds like good news for earnings as well as long-term shareholders.

Suzanne Frey, an Alphabet executive, is a member of The Motley Fool's board of directors. Adria Cimino has no position in any stocks. The Motley Fool has positions and recommends Advanced Micro Devices, Alphabet, 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.

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