Many businesses use artificial intelligence (AI) to provide customers with better product recommendations, quicker access to information, customer support and other essentials. ChatGPT’s immense success has further brought artificial intelligence into the spotlight. And investors are searching high and low for AI stocks to buy.
More companies will rush to release their own AI applications and use available tools to increase revenue. In this AI goldrush, some of the best opportunities come from companies selling metaphorical shovels. Anyone taking aim at AI riches will need the resources to create AI tools and optimize their systems.
Many stocks involved with AI have surged since May, but a few stocks still present compelling opportunities. If you want to position your portfolio for an AI boom, these are the three best AI stocks to buy in July.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) has been one of the biggest winners in 2023, with year-to-date gains closing in at 200%. The company produces servers and storage solutions for businesses and achieved strong growth numbers in Fiscal Year 2022.
During that year, net income more than doubled, going from $111.9 million in 2021 to $285.2 million in 2022. Rising net sales and lowering operating expenses as a percentage of revenue contributed to this trend. Super Micro Computer also achieved 46.1% revenue growth in FY 2022.
While revenue growth decreased slightly in the most recent quarter, net income jumped from $77 million to $86 million, representing an 11.7% year-over-year jump. The revenue drop may appear concerning, but it’s worth remembering that Nvidia (NASDAQ:NVDA) also reported lower revenue in the first quarter compared to the same quarter last year. Despite a 13% year-over-year revenue decrease, Nvidia surged on its strong guidance and bullishness on artificial intelligence.
Super Micro Computer finds itself in a similar situation but with a more reasonable P/E ratio. While Nvidia clings to a P/E ratio over 200, SMCI stock only has a 23 P/E ratio. Charles Liang, the CEO of Super Micro Computer, mentioned in the Q1 press release that the company has seen record levels of engagement in its new generation product lines, especially for AI applications. SMCI stock is in a good position to thrive from the AI boom in July and beyond, landing it on investors’ lists of AI stocks to buy.
Axcelis Technologies (ACLS)
Axcelis Technologies (NASDAQ:ACLS) is a semiconductor company that stands to gain market share as artificial intelligence tools gain traction. The company has done well before the rising demand for AI tools, with 39% year-over-year revenue growth in FY 2022. The company also reported net income growth of 86% year-over-year.
In the first quarter, Axcelis Technologies raised its guidance and indicated its Purion product family continued to generate strong demand. Advanced logic chipmakers use the Purion product line to increase productivity and enhance each chip’s purity. Companies need Purion to minimize particle and metal contamination within the chips that can impact their functionality.
Axcelis is emerging as a leader in the semiconductor space, and chip makers will need services like Purion to keep chips in good condition. As AI chips rise in demand, chip makers will increasingly turn to companies like Axcelis Technologies for help. The company currently has a P/E ratio of 32.
Symbiotic (SYM)
Symbiotic (NASDAQ:SYM) has been another big winner in 2023. The company reached the public markets through a SPAC in 2022 and has been a top performer in the stock market. Shares have more than tripled since the start of 2023.
Symbiotic produces AI-powered robots that help in warehouses. Its technology addresses challenges in the supply chain. Companies using Symbiotic’s robots get the double benefit of higher productivity and lower costs.
Unlike the other companies on this list, Symbiotic is not yet profitable. However, net losses have decreased rapidly over the past year, and revenue has been soaring. Excluding non-controlling interests, the company reported a net loss of $6.1 million, which is better than the company’s $29.9 million net loss from the same quarter last year.
As net income gets closer to becoming positive, the revenue growth will shine even more. In the second fiscal quarter, Symbiotic reported 177% year-over-year revenue growth. Revenue has also more than doubled in the two previous quarters.
Symbiotic is a high-flying, unprofitable company with a stock price that depends on continued revenue growth and a switch to profitability. The rising demand for AI can help Symbiotic become profitable and continue its streak of high revenue growth.
On this date of publication, Marc Guberti held long positions in SMCI and ACLS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
