The U.S. economy is currently benefitting from new jobs and a rise in the labor force participation rate. This not only showcases a healthy and expanding job market but also signifies sustained economic momentum. Concurrently, the artificial intelligence market, valued at $103.7 billion as of 2022, is projected to reach $594 billion by 2032. Factors for this growth include digitalization, penetration and innovation. Innovation — especially in the AI industry — is looking to be huge; these three strong buy AI stocks are looking to be very profitable.
Micron Technology (MU)
Micron Technology (NASDAQ:MU) is a leading producer of innovative technology for memory and storage solutions. It specializes in technology that eases the use of AI generative experiences.
Currently, MU is priced at $97.62 with its YOY growth being a hefty 77.72%. According to forecasts from 37 analysts, MU is ranked as a strong buy from many of these analysts. The high price target for MU is $140 within 12 months, exhibiting its continuation of steady growth.
Recently, MU is said to be mass-producing a high bandwidth memory chip that will be used in Nvidia’s (NASDAQ:NVDA) artificial intelligence GPU. The chip, HBM3E which is said to start shipping in the second quarter, will heavily ease AI workloads and cut power costs as well. This puts MU in a good position and exemplifies its capability with the growing generative AI industry. CEO, Sanjay Mehrotra expects, “several hundred millions of dollars of HBM revenue in fiscal 2024.”
Overall, Micron Technology brings steady price growth to the table as well as innovative contributions to the generative AI industry, making it a solid option among strong buy AI stocks.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) is an American AI and IT company. It has reached a valuation of $1,140.01, a 1013.83% increase YOY and most analysts rate it as a strong buy.
SMCI has shown superb revenue growth from $15.87 billion in 2023 to $63.76 billion in 2024, demonstrating a 301.62% increase. EBITDA Growth (YOY) was also outstanding at 25.13% compared to the sector median of 1.48%. EBIT Margin (TTM) showed promise as well, being 9.40%, when compared to the sector median of 4.76%. Overall, these financials exhibit Super Micro’s high value, growth potential and profitability, making it a promising stock for the average investor.
The AI industry depends on SMCI’s server products, classified as the industry’s highest-performing and fastest servers. Due to the demand for these servers and the relatively low competition, these products are the company’s flagship. The demand for these servers will only skyrocket as companies expand into the AI market due to its superior product.
Overall, due to its dominance in the AI server product market and astonishing financials, I give SMCI a “strong-buy” rating and expect its stock to shoot up in 2024.
Palo Alto Networks (PANW)
Palo Alto Networks (NASDAQ:PANW) provides cybersecurity services worldwide. Its SaaS products include firewalls, Panorama, a security management solution and multiple subscription-based services. It sells its products and services both first-hand and through partners, operating in various private and public sector enterprises.
PANW has consistently beaten earnings estimates, with 2023 being its first profitable year. It carries a low ESG risk score of 13.9%, making it a stable investment, with analysts predicting an average growth potential of around 18.17%. A profit margin of 30.24%, high YOY quarterly growth, and a return on equity of 15.98% show management’s efficiency.
The cybersecurity sector has a projected CAGR of 13.8%, reaching $424.97 billion in 2030. Impressive sector growth coupled with heightening competition put PANW in a great position. While some analysts are worried about a potential pricing war rising from the competition, AI-enabled innovations in Secure Access Service Edge (SASE) architecture, among other niches cause PANW to stand out. Additionally, it has been expanding into the mobile-internet security niche, with the recent launch of a Private 5G Security Solution.
While other industry heavy-weights such as Crowdstrike (NASDAQ:CRWD) or Cloudflare (NYSE:NET) are also rapidly expanding in this sector, PANW is a worthy investment. Rapid EPS growth, low risk, great financials and innovations in the services provided and healthy expansion make this stock a buy.
On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
