Over the past two years, artificial intelligence (AI) has been the key trend that many investors have focused on. The amount of technological innovation with AI has caused waves among users everywhere. Most have tried out ChatGPT or other generative AI models and come to the same conclusion: AI is smart and is certainly going to be a resource we all utilize moving forward.
Questions around how AI will be used aside, certain companies are uniquely poised to benefit from the surge in AI application growth over time. These three long-term AI stocks may not be surprising to many. I’m focusing on the best of the best in this sector in this piece. However, it’s worth noting that quality matters in this space. In my view, these are the three companies with sustainable AI tailwinds I think the market is right to focus on right now.
Nvidia (NVDA)
Founded over three decades ago, semiconductor giant Nvidia (NASDAQ:NVDA) is certainly a company many investors have focused on for a variety of reasons. This chip juggernaut has seen previous surges tied to growth in gaming, crypto and a range of other technological advancements. Computing power demand has risen over time in a relatively exponential fashion, with different driers each time.
Thus, investors shouldn’t be surprised to see the company pop on a surge in interest around AI. This catalyst is as real as many of the company’s previous catalysts, but many think there’s a much longer runway to this particular technology (and for good reason).
On Tuesday, June 18, Nvidia replaced Microsoft (NASDAQ:MSFT) as the world’s most valuable company. Shares rose after the news broke out, rising 3.6%. Currently, Nvidia has a market cap of $2.9 trillion, surpassing both Microsoft and Apple (NASDAQ:AAPL).
Over the past year, NVDA stock has seen a 178% increase due to its successful Q1 earnings report last May. Impressively, this stock has also seen a nine-fold increase since 2022, and its most recent rally can be almost entirely tied to the rise of generative AI. To add more positive news, Nvidia’s 10-for-1 stock split improved its chances of joining the Dow soon.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) shares rose 10% on Thursday, driven by strong Broadcom (NASDAQ:AVGO) earnings, positive Oracle (NYSE:ORCL) news and AI stock momentum. With surging AI demand driving demand for server hardware and solutions, the server specialist’s stock has surged nearly 200% this year.
Super Micro Computer’s rack-scale systems, integrating power, storage, cooling and software, support high-performance Nvidia and AMD (NASDAQ:AMD) AI chips. This demand drove its sales to $3.9 billion in the last fiscal quarter, a 200% increase. Earnings per share surged 308% to $6.65, benefiting from the growing need for complex data processing.
Moreover, the company expanded its manufacturing capabilities globally, including in San Jose, Taiwan and Malaysia. They aimed to increase monthly rack production to 5,000, up from 4,000 last year and 3,000 in 2022. Now, with a strong focus on AI data centers and its 5S Strategy, Supermicro forecasts $25 billion in sales over the next few years, contradicting its 2024 forecast of $14.7 billion.
Palantir Technologies (PLTR)
Another AI stock investors may want to consider is Palantir Technologies (NYSE:PLTR), founded in 2003 by Peter Thiel and Alex Karp. While the company has existed for years, it only went public and became a listing in 2020. However, since then, the stock has surged 138%. The company’s momentum accelerated from early 2023 with the launch of its Artificial Intelligence Platform (AIP), integrated into platforms like Foundry and Gotham.
PLTR stock has been on the rise, surging during June 20’s premarket session. That was tied to news that Palantir secured an exclusive deal to supply data management solutions for the Starlab commercial space station, led by Voyager Space, Airbus SE (OTCMKTS:EADSY), Mitsubishi (OTCMKTS:MSBHF) and MDA Space. CEO Alexander Karp expressed excitement about enhancing global intelligence capabilities — on Earth and in space.
Starlab Space and Palantir utilized digital twins and AI to optimize operations. Palantir also secured a $19 million, two-year contract from ARPA-H for critical data infrastructure. Assuming more deals come down the pike, this is an AI stock with some pretty clear catalysts investors are right to focus on right now.
On the date of publication, Chris MacDonald did not hold (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.
