Top Growth Stock in Artificial Intelligence (AI) to Purchase and Hold Long-Term

Let’s get straight to it: The capacity of generative artificial intelligence (AI) to streamline specific tasks and boost efficiency has grabbed the interest of businesses globally. Generative AI is capable of composing original documents, condensing existing data, developing presentations, and even generating and fixing computer code — with new applications being uncovered on a regular basis. Cathie Wood, the mysterious founder of Ark Investment Management, has consistently focused on disruptive innovation, and her perspective on the potential of generative AI is truly enlightening. “AI is poised to facilitate the largest productivity surge in our past,” she remarked. “The productivity advances will be remarkable and surprising.” One organization at the nucleus of this prevailing trend is Super Micro Computer (NASDAQ: SMCI), commonly known as Supermicro. While the stock has risen alongside the surge of AI over the past year, there is a lot more to anticipate. ![Image source: Getty Images.](image-source) Although not a universally recognized name, Supermicro has become prominent in the last year or so as a top supplier of servers utilized in business data centers, cloud computing, and AI systems. The company provides a wide range of servers and storage solutions, from comprehensive plug-and-play systems to modular components. Supermicro also assists customers in setting up and enhancing their computing infrastructure. Having developed leading-edge server and storage systems for over thirty years gives Supermicro a competitive edge when it comes to capitalizing on generative AI. Supermicro collaborates closely with Nvidia, Advanced Micro Devices, and Intel, among others, to guarantee its servers receive a consistent supply of — and perfectly align with — the newest and most advanced AI-centric processors. A vast and ever-expanding prospect Although AI has been present for decades, generative AI represents the next substantial shift in technology. The capability to substantially boost productivity differentiates this technology from its antecedents. Enterprises are also seeking an advantage, and the potential to save time and money has companies of all kinds eager to partake in the opportunities. While projections are abundant, no one can offer a definitive valuation of the market size. Generative AI could potentially become a $1.3 trillion market by 2032, according to Bloomberg Intelligence. A more bullish scenario can be observed in Ark Invest’s Big Ideas 2024 report, where Cathie Wood proposes that the AI software market alone could yield additional spending of $13 trillion by the end of the decade. While the market’s dimensions remain indistinct, one certainty emerges: The opportunity is hefty. Stellar results Supermicro’s outcomes help to highlight the opportunity. For the company’s fiscal 2024 second quarter (ending Dec. 31), Supermicro generated net sales of $3.66 billion, marking a 103% yearly surge and a 73% sequential uptick. Concurrently, adjusted EPS of $5.59 represented a 71% escalation. The company underscored that its unprecedented growth was propelled by the demand for rack-scale systems utilized in AI. Management anticipates the company’s growth momentum to persist. Supermicro predicts third-quarter revenue ranging from $3.7 billion to $4.1 billion, denoting a 205% year-over-year growth at the midpoint of its guidance. Profit is also projected to climb, with adjusted EPS approximately $5.61, a 244% increase. The company also enhanced its full fiscal-year revenue forecast to between $14.3 billion and $14.7 billion, at least a 100% rise. CEO Charles Liang addressed the perpetual demand, declaring, “Overall, I feel very confident that this AI boom will continue for another many quarters, if not many years.” Supermicro is targeting a total addressable market sized at $25 billion. To meet the substantial and mounting demand, management has launched two new production facilities in close proximity to its Silicon Valley headquarters, in addition to the manufacturing facility already slated to start operations in Malaysia. A compelling prospect Super Micro Computer stock has been on a meteoric rise, up 766% over the past year at the time of this publication. With such substantial gains, one might assume the stock has become exceedingly expensive, yet nothing could be farther from reality. Despite its exponential ascension, the stock still trades for merely 2 times next year’s sales — a standard for a reasonably priced stock. The low-cost price, robust and expanding demand for its products, and the secular winds of change brought by AI illustrate why Supermicro is primed to reap the rewards of this unique opportunity. **Should you invest $1,000 in Super Micro Computer right now?** Prior to acquiring stock in Super Micro Computer, reflect on this: The Motley Fool Stock Advisor analyst team recently uncovered what they believe are the 10 top stocks for investors to snatch up now… and Super Micro Computer wasn’t on the list. The 10 stocks that made the cut could potentially generate incredible returns in the years to come. Stock Advisor equips investors with a straightforward blueprint for success, comprising advice on constructing a portfolio, regular updates from analysts, and two fresh stock picks each month. The Stock Advisor service has more than tripled the returns of S&P 500 since 2002*. View the 10 stocks *Stock Advisor returns as of February 26, 2024 Danny Vena holds positions in Nvidia and Super Micro Computer. The Motley Fool holds positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool advocates for Intel and Super Micro Computer and suggests the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool adheres to a disclosure policy. Originally published by The Motley Fool, “**A Once-in-a-Generation Investment Opportunity: 1 Artificial Intelligence (AI) Growth Stock to Buy Now and Hold Forever**”

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