Top 3 Semiconductor Stocks, Including Nvidia, to Consider Buying for the Artificial Intelligence (AI) Revolution

Top 3 Semiconductor Stocks, Including Nvidia, to Consider Buying for the Artificial Intelligence (AI) Revolution

ChatGPT, Claude, and Gemini are just a few of the powerful artificial intelligence (AI) chatbot applications available today. They can interpret and generate text, images, video and computer code, which could lead to a productivity boom in the global economy.

But these AI applications wouldn’t be possible without data centers full of advanced semiconductors, which developers use to create, train and deploy their models. Nvidia (NASDAQ:NVDA) CEO Jensen Huang estimates that the current installed base of data center infrastructure, estimated at $1 trillion worldwide, will double in the next five years thanks to AI.

This creates a substantial opportunity for major chip makers Nvidia, Advanced microsystems (NASDAQ:AMD)And Micron technology (NASDAQ:MU). Here’s why investors might want to own a stake in each to take advantage of the AI ​​boom.

1.Nvidia

The gaming industry was once Nvidia’s biggest source of revenue, but its graphics processing units (GPUs) for the data center are now progressing its activity. In fiscal 2024 (ended Jan. 28), Nvidia’s H100 GPU drove the company’s data center revenue 217% to $47.5 billion, and the current fiscal 2025 should bring more growth.

Nvidia’s H100 is the most sought-after data center chip for AI workloads. Many tech giants are lining up to buy it in large volumes, since Amazon has Oracle has Metaplatforms. But Nvidia will accelerate its shipments of its new H200 GPU this year, which could fuel the company’s next wave of growth.

The H200 can infer (that is, feed live data to an AI model so it can make predictions) at twice the speed of its predecessor, and it also consumes 50% power in less, which represents a significant saving for data center operators. .

Longer term, all eyes are on Nvidia’s new Blackwell architecture, which will power its next-generation chips. The company is expected to ship its Blackwell B200 GPUs next year, which will offer 15x faster inference speed than the H100.

Wall Street expects Nvidia’s total revenue to climb 81% to a record $110 billion in the current fiscal year. Despite its stock’s gain of 240% over the past 12 months, there is still plenty of room for upside.

2. Advanced Micro Devices (AMD)

AMD makes some of the most popular consumer electronics chips in the world. They are found in the Microsoft Xbox Series Sony PlayStation 5, not to mention a long list of personal computers. But AMD recently launched its MI300 series of data center chips in an effort to hunt down Nvidia.

The MI300 is available as a standard GPU called the MI300X, but it is also available in a combined GPU and CPU configuration called the MI300A. AMD is already shipping the MI300A to Lawrence Livermore National Laboratory for its El Capitan supercomputer, which will be one of the most powerful in the world when it comes online this year. But a number of leading data center operators, including Microsoft, Oracle and Meta Platforms, are also lining up to purchase the MI300 series.

While AMD pursues Nvidia in the data center space, the company has a dominant 90% market share in the emerging AI-driven personal computing sector. Millions of computers from manufacturers like Dell And HP already come with AMD’s Ryzen AI chips, which allow users to process AI on the device. This leads to a faster, more responsive experience because AI workloads do not need to travel to and from the data center.

During the recent fourth quarter of 2023, the Ryzen AI series boosted the company’s Client segment revenue by 62% year-over-year. Combined with growing shipments of MI300 chips – which could generate $3.5 billion in sales in 2024 – this could be the biggest year for AMD.

3. Microns

Micron doesn’t get as much attention as Nvidia and AMD because it produces memory (DRAM) and storage (NAND) chips, which aren’t as glamorous as GPUs. However, every GPU requires memory, and it is essential to extract maximum performance from it.

Micron’s latest HBM3E (high bandwidth memory) data center solution has been selected by Nvidia to power its new H200. It’s an obvious choice because it uses 30% less power than competing HBM hardware, making it much more cost-effective. Micron is currently testing a new HBM3E product, which packs 50% more memory into each GPU, allowing Nvidia customers to bring their AI models to market much faster.

Micron’s entire 2024 HBM inventory is already sold out, and much of its 2025 inventory is also already reserved.

Like AMD, Micron’s AI opportunities extend beyond the data center. AI-enabled chipsets built into new personal computers can require 80% more DRAM content than traditional models, which is ideal for Micron’s business. Many modern smartphones also feature AI chips, which require twice as much DRAM as traditional devices. Samsung’s new Galaxy S24 is packed with AI features and runs on Micron’s hardware.

Micron’s revenue jumped 57% year over year during the second quarter of fiscal 2024 (ended February 29). The company also generated a net profit of $793 million, marking a welcome return to profitability after more than a year struggling with falling prices due to an oversupply of chips.

Micron’s guidance for the third quarter of fiscal 2024 (ending June 1) indicates accelerated revenue growth of 76%. Micron stock is trading at an all-time high, but it remains cheaper than Nvidia and AMD, which could provide a great buying opportunity for investors.

Should you invest $1,000 in Nvidia right now?

Before buying Nvidia stock, consider this:

THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and Nvidia wasn’t one of them. The 10 selected stocks could produce monster returns in the years to come.

Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor The service has more than tripled the performance of the S&P 500 since 2002*.

See the 10 values

*Stock Advisor returns March 25, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Advanced Micro Devices, Amazon, HP, Meta Platforms, Microsoft, Nvidia and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

3 Super Semiconductor Stocks (Including Nvidia) to Buy for the Artificial Intelligence (AI) Revolution was originally published by The Motley Fool

Source Reference

Latest stories