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These 3 AI Stocks That Could Outperform NVIDIA Over the Next 12 Months
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The artificial intelligence revolution has completely reshaped how many investors think about the stock market. Companies that have announced major pivots toward AI have seen their multiples surge in many cases, though the list of companies that are seeing meaningful impacts to their bottom line already is slim.
That said, there are a few key AI beneficiaries that are better than others. These are companies that aren’t just calling out AI a few dozen times during an earnings call in a bid for a higher valuation. These are companies that are in many cases driving the AI trend forward.
As investors look to sift through what’s real in this fast-moving space, here are three stocks I thing could outperform NVIDIA in the next 12 months.
Key Points About This Article:
- The AI revolution has become a rather bifurcated one, with a few companies generating immediate profits from this trend, and others simply looking to game the system.
- Here are three AI stocks I’d argue have real and meaningfully sustainable AI catalysts that could be worth considering, particularly on dips moving forward.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
ASML Holdings (ASML)
ASML (NASDAQ:ASML) is a Netherlands-based company that’s a leading global supplier of semiconductor equipment. The company’s extreme ultraviolet (EUV) lithography tools are crucial for AI giants like Nvidia and TSMC to develop and produce their chips, meaning the entire AI thesis could really be riding on ASML’s back.
The company recently surpassed expectations with its Q2 bookings of €5.6 billion, a number which rose from €4.5 billion a year ago and €3.6 billion in Q1 2024. A significant portion of this higher bookings activity came from €2.5 billion in EUV lithography machine orders, crucial for advanced chip production. Despite a 56% year-over-year increase in EUV bookings and a robust €39 billion backlog, ASML’s stock dropped 12% following its earnings report. This particular report showed a lower-than-expected revenue outlook and fears over potential U.S. restrictions on sales to China, a key market for ASML’s older equipment
Despite potential setbacks in China, ASML is well-positioned for long-term growth due to strong global demand for AI chips. The AI chip market is forecasted to reach $296 billion by 2030, with EUV lithography expected to grow from $9 billion to $37 billion in revenue. With an essential monopoly on the key equipment required to produce high-performance chips, it’s hard to bet against this stock as a key AI beneficiary right now.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) is a leading supplier of server and storage solutions, with its direct liquid cooling technology leading to major advancements in terms of server efficiency (up to 25%-30% reduction in energy required to run a server farm). For the company’s data center clients, this technology has been worth the up-front investment, leading to a 143% surge in sales to $5.3 billion in its fiscal Q4 report.
Now, it’s worth noting that Super Micro has come under fire from short sellers for a string of alleged accounting manipulation tactics, which regulators are now exploring. So, there are plenty of headwinds to consider with this stock, which is now down more than 60% from its peak. I’m not going to sugar coat it, this is an AI stock with plenty of hair on it.
That said, for those bullish on the company’s core technology (which is increasingly modular, inability quick customizations for clients), Super Micro’s impressive revenue and earnings growth is worth considering. And even if its revenue growth was overstated some, the fact that the company outpaced industry rivals more than 5x in recent quarters is noteworthy.
The company’s upcoming 10-for-1 split in late-September won’t address the company’s recent earnings miss or declining stock performance. But I do think if the company can turn things around and continue grabbing market share in the server space, this is a stock that could have plenty of room to run higher from current levels.
Symbotic (SYM)
Symbotic (NASDAQ:SYM) is a company focused on leveraging artificial intelligence technology to transform warehouse automation with its machine learning robotics. The company saw a 79% sales increase in Q1, reaching $424 million, up from $267 million in the same period last year.
That’s some impressive growth, which has been driven by Symbotic’s end-to-end automation solutions. These solutions are currently being used by major clients like Walmart, Target, and Albertsons, who are looking to optimize inventory turnover and speed up distribution. Walmart, a significant investor with a 13% stake in the company, plans to deploy Symbotic’s platform in all 42 U.S. distribution centers. This reliance on Walmart, which accounts for nearly 88% of Symbotic’s revenue, underscores the technology’s growth potential, but also highlights a core risk with its overall business model.
As Symbotic expands its client list, and potentially diversifies its revenue streams further, I think there’s a lot to like about where this stock could be headed from here. Recent results suggest the company is headed in the right direction, and I’m bullish on this AI/automation stock over the long-term, particularly at its relatively small valuation (compared to its potential).
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