Have $1,000? These 2 Stocks Could Be Bargain Buys for 2024 and Beyond

Have ,000? These 2 Stocks Could Be Bargain Buys for 2024 and Beyond

Buying and holding shares of strong companies for a long time is a great way to make money in the stock market. This strategy not only allows investors to benefit from the power of compounding, but also to capitalize on secular growth trends.

For example, an investment of $1,000 in Nasdaq-100 Technology Sector Index ten years ago, would be worth over $5,200 today, as shown in the chart below.

Have ,000? These 2 Stocks Could Be Bargain Buys for 2024 and Beyond

^NDXT Chart

The index has benefited from several secular growth trends over the past 10 years, ranging from strong demand for 5G smartphones to the advent of connected vehicles to the increase in remote working, which has led to a rise in sales of computers and workplace collaboration software. And now, technology stocks are benefiting greatly from the proliferation of artificial intelligence (AI).

AI is already impacting many industries and is expected to contribute $15.7 trillion to the global economy by 2030. This is why now would be a good time to take a closer look. Micron technology (NASDAQ:MU) And Applied materials (NASDAQ:AMAT).

Both companies play a critical role in AI adoption. So if you have $1,000 to invest after paying your bills, settling your high-interest loans, and saving enough for tough times, it might be a good idea to put that money into these two stocks. Let’s look at the reasons why.

1. Micron technology

Micron Technology has proven to be a terrific investment over the past decade, turning a $1,000 investment into just over $4,600 as of this writing. This is impressive considering that Micron is a memory chip manufacturer, a market renowned for being cyclical.

The good news for Micron investors is that the memory industry appears poised for a sustained period of solid long-term growth driven by AI. Micron peer SK Hynix recently highlighted that demand for high-bandwidth memory (HBM) deployed in AI chips could grow at an annual rate of 60% in the medium to long term.

Micron is already reaping the benefits of AI-driven growth in the memory market. Its revenue in the second quarter of fiscal 2024 (which ended February 29) increased 58% year over year to $5.8 billion. The company is expected to end the current year with a strong increase in revenue from fiscal 2023 levels of $15.5 billion, and it is also expected to maintain its healthy growth momentum over the two coming years.

Table of MU revenue estimates for the current fiscal yearTable of MU revenue estimates for the current fiscal year

Table of MU revenue estimates for the current fiscal year

It would not be surprising to see Micron maintain impressive growth levels for a longer period, as Grand View Research forecasts overall memory market growth of 11.6% through 2030. Memory Market Revenue could reach $240 billion by the end of the forecast. period, compared to just under $125 billion this year.

It is worth noting that the growth of the memory market will be fueled by multiple AI-related catalysts, ranging from data centers to smartphones to personal computers, paving the way for robust growth of Micron’s business in the long term. The chipmaker is preparing to make the most of this opportunity by investing $150 billion in research, development and manufacturing over the next decade.

That’s why investors with $1,000 of cash to invest might consider putting that money into Micron stock, as it currently trades at an attractive price of 18 times forward earnings. This represents a discount to the Nasdaq-100 Index’s 26x forward earnings multiple, and makes buying this semiconductor stock a no-brainer given the exceptional growth it generates and the lucrative opportunity at hand. long term on which it finds itself.

2. Applied materials

A $1,000 investment made in Applied Materials stock 10 years ago is worth more than $10,500 today. The company benefited from secular growth in the semiconductor market during this period. Indeed, Applied Materials sells semiconductor manufacturing equipment to foundries such as Samsung, TSMCAnd Intel who make chips.

It is worth noting that the global semiconductor market generated revenue of $335 billion in 2014, a figure that is expected to reach $588 billion in 2024. The good news for Applied Materials is that AI is expected to drive stronger semiconductor growth over the next decade. Demand for AI chips is expected to increase 10-fold over the next decade, generating annual revenue of $341 billion in 2033.

This explains why semiconductor-focused data platform TechInsights expects the market to double over the next decade, which would be an acceleration from the growth the sector has seen over the past 10 years. This increase in semiconductor sales is also expected to lead to an increase in semiconductor equipment sales, as foundries are expected to invest in their production capacity to meet higher demand.

Unsurprisingly, the semiconductor equipment market is expected to generate $220 billion in annual revenue in 2034, up from an estimated $105 billion this year, according to Future Market Insights. Applied Materials will therefore have a larger market to exploit in the future, which should help the company emerge from its recent slump.

Applied Materials released its second quarter fiscal 2024 results (for the quarter ended April 28) on May 16. The company’s revenue was flat from the year-ago period at $6.65 billion, as growth in AI spending was offset by lower spending. orders from other segments such as automotive and communications.

Applied Materials CEO Gary Dickerson said during the latest earnings conference call that “AI will be the biggest technological inflection point of our lifetimes” and that his company is well-positioned to capitalize on this trend. Specifically, Dickerson points out that AI is driving increased consumption of chips such as high-bandwidth memories (HBMs) and full-gate transistors, and the company is seeing tangible gains as a result.

For example, Applied Materials expects HBM-related revenues to grow 6-fold this year to $600 million. On the other hand, the growing adoption of universal chips will generate $2.5 billion in revenue in 2024 and more than double that level in 2025. This explains why analysts expect Applied’s revenue Materials increases 11% in fiscal 2025 to $27.4 billion after an estimated decline of 7% from current. However, as the following chart indicates, analysts have increased their estimates.

Table of AMAT revenue estimates for the current financial yearTable of AMAT revenue estimates for the current financial year

Table of AMAT revenue estimates for the current financial year

Improving Applied Materials’ growth through AI could send the stock skyrocketing in the long term, which is why investors would do well to buy the stock immediately as it currently trades at 26 times earnings, a discount compared to the Nasdaq. A multiple of 100 of almost 30.

Should you invest $1,000 in Micron Technology right now?

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Hard Chauhan has no position in any of the stocks mentioned. The Motley Fool features and recommends the Applied Materials and Taiwan Semiconductor Manufacturing industries. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

Do you have $1,000? These 2 Stocks Could Be Advantageous Buys for 2024 and Beyond was originally published by The Motley Fool

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