artificial intelligence (A.I.) has become a stock market buzzword after companies specializing in this industry experienced solid growth. Many companies have announced efforts to use AI and generative AI to improve productivity and enhance their products.
AI is still in its infancy. The tool is appearing in more places and offering attractive opportunities to investors. Semiconductors are required for various AI tools to operate. Semiconductor companies also offer chips specifically for artificial intelligence tools.
So investors looking to ride the AI rally may want to consider these top semiconductor stocks.
Super Micro (SMCI)
Source: Shutterstock
super micro (NASDAQ:SMCI) is an emerging leader in the AI industry. S&P500 This year’s index. Investors have increased the company’s stock by 700% over the past year as the company’s leading position in the AI space has become better known.
Supermicro makes servers that can handle the intense workloads of AI tools. Rather than manufacturing AI chips, Supermicro’s solution nicely complements these chips.
Companies looking to leverage artificial intelligence will need to turn to companies like Supermicro. The company is experiencing increased demand from existing customers and even more interest from new customers.
Supermicro delivered an exceptional year-over-year performance of 103% (YoY comparison) Revenue Growth Rate for Q2 FY2024. Stock prices are on an upward trend. Nvidia (NASDAQ:NVDA) may be extended due to low valuation and market capitalization.
SMCI has a market capitalization of approximately $38 billion and a P/E ratio of 52. Also, this stock has a PEG ratio of 0.76. A PEG ratio of less than 1 indicates that the stock is undervalued.
Broadcom (AVGO)
Source: Sasima / Shutterstock.com
broadcom (NASDAQ:AVGO) is a semiconductor and software giant with a long history of delivering returns to shareholders. Broadcom has outperformed most stocks over the past five years through dividend increases, dividend increases, and stock buybacks. During this time, AVGO made his 355% profit.
The company’s Trident 5-X12 chip could lead to further market share and financial growth. This chip consumes 25% less power per 400G port than the current market leader Trident 4-X9. In other words, this is a more efficient chip that can help businesses looking to harness the power of AI. Broadcom offers a broad portfolio of chips to meet customer needs.
The company also announced positive financial results for the third quarter of fiscal 2023. Broadcom said in a report that revenue increased 5% year-over-year and net income increased 7.4% year-over-year. Moreover, the company’s net profit margin was 37.2%.
Therefore, Broadcom’s industry strength and exposure to multiple growth opportunities make it an attractive choice for long-term investors.
Advanced Micro Devices (AMD)
Source: Pamela Marciano/Shutterstock.com
Advanced Micro Devices (NASDAQ:AMD) is recovering after several difficult quarters. The company ended his 2023 on a strong note with 10% year-over-year revenue growth. AMD also rebounded from low profits in the fourth quarter of 2022 and posted a net profit of $667 million in the fourth quarter of 2023.
The stock has outperformed the stock market over the long term, gaining 628% over the past five years. Momentum remains strong in this stock as it’s up 112% over the past year.
Thanks to AI tailwinds, Advanced Micro Devices can continue its rise. The semiconductor giant is ready and has his portfolio of AI chips, including Instinct MI300X accelerators, Ryzen processors, and Radeon graphics cards.
Although Nvidia is the industry leader, AMD has the potential to gain market share and achieve significant revenue growth in the coming years. AMD has the potential to become a trillion dollar stock.
On the date of publication, Mark Guberti held long positions in SMCI and AVGO. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publication guidelines.
