As artificial intelligence (AI) becomes increasingly embedded in global business practices, its impact on stock markets has been undeniable. The last year has marked significant milestones in AI development, particularly in generative AI technologies that enhance productivity across various sectors. This rapid advancement has positioned AI as a pivotal element in business operations, driving efficiency and innovation.
In light of these developments, despite their stellar performance in 2023, some AI stocks still hold considerable potential for growth. According to a couple of Wall Street analysts, there are two AI stocks in particular that are expected to see substantial gains in the near future.
Nvidia demonstrates the immense potential of AI. Its GPUs, essential for parallel processing, have not only transformed the gaming world but have also catalyzed the evolution of AI technologies. Over the fiscal year 2024, Nvidia achieved a remarkable revenue growth of 126% year-over-year, reaching approximately $61 billion, while its diluted earnings per share surged by 586%.
People over the internet are also showing great faith on Nvidia’s growth potential
‘Nvidia is back over $1,200’ is what you will be posting within 6 months
— Daniel Oakley – Investing (@DanielOakleyy) April 15, 2024
Looking ahead to the first quarter of fiscal 2025, Nvidia expects to set a new revenue record of $24 billion, marking a 234% increase from the previous year. This forecast is fueled by the burgeoning demand for generative AI technologies. Despite Nvidia’s stock soaring by 488% since the beginning of 2023, Rosenblatt analyst Hans Mosesmann, a staunch advocate for the stock, predicts a further 63% rise, setting a target price of $1,400. Mosesmann notes the shift to accelerated compute from general compute, driven by generative AI, as a transformative development for the industry.
Another significant player in the AI space is Super Micro Computer, commonly known as Supermicro. This company specializes in integrating advanced GPUs and other processors into robust servers designed for the intense demands of AI processing. With a focus on energy-efficient and versatile server solutions, Supermicro reported a revenue increase of 103% in the second quarter of fiscal 2024, with adjusted earnings per share rising by 71%.
For the upcoming third quarter, Supermicro anticipates revenues of $3.9 billion and earnings per share of $5.22, which would represent year-over-year increases of 205% and 220%, respectively. Loop Capital analyst Ananda Baruah is highly optimistic about Supermicro’s prospects, particularly its role in the generative AI server market. Baruah has set a bullish price target of $1,500 for the stock, suggesting a potential upside of 70%.
Given the solid growth trajectories and the increasing integration of AI into various sectors, Nvidia and Super Micro Computer present compelling opportunities for investors. Their robust performance metrics and the ongoing demand for AI capabilities highlight their potential for substantial future gains. As AI continues to evolve and expand its influence, these stocks are poised to deliver significant returns to savvy investors looking to capitalize on technological advancements.
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