Stock market fluctuations present a range of long-term investment opportunities, particularly impacting industries such as artificial intelligence (AI) that are experiencing rapid growth.
While novice investors may be wary of market downturns, seasoned individuals often use these periods to acquire more of their preferred stocks. Maintaining lower prices can enhance an individual’s margin of safety.
Consider exploring the following AI-related stocks during market dips:
Supermicro (SMCI)
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Supermicro (NASDAQ: SMCI) stands out as a trailblazer in the AI sector, delivering substantial returns to long-term shareholders. With a remarkable surge of over 700% in the past year and a phenomenal 5-year growth exceeding 4,459%, Supermicro has demonstrated its potential.
Following a robust earnings report, the stock initially surged by over 10%, showcasing the company’s rapid expansion akin to Nvidia (NASDAQ: NVDA) in 2023. Any temporary weaknesses in the stock present strategic buying opportunities for a company at the forefront of AI infrastructure, with Supermicro’s servers capable of handling intensive AI workloads.
Supermicro has exhibited impressive top and bottom-line growth, rendering its valuation attractive. Boasting a net cash position of $350.03 million, the stock is currently trading at a 35-forward P/E ratio.
While Supermicro has already delivered promising returns, its growth trajectory seems far from over. With the acceleration of AI adoption and achievable growth targets, the company is poised for continued success in the upcoming quarters.
Broadcom (AVGO)
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As a dominant player in semiconductors and software, Broadcom (NASDAQ: AVGO) maintains robust profit margins while consistently expanding its revenue streams. Over the past five years, the stock has surged by 364%, with a notable 108% increase in the last year.
Highly regarded by experts, Broadcom is endorsed as a buy by 19 out of 20 analysts, with the remaining two suggesting a hold. The stock’s highest price target of $1,550 implies a potential upside of 21.6%.
Broadcom’s recent acquisition is set to bolster its position in the virtualization space, complementing its semiconductor focus, particularly in AI chips. CEO Hock Tan’s statements regarding the merger underscore the company’s commitment to enhancing cloud environments and driving sustainable growth through strategic investments.
Investors have historically reaped substantial rewards from Broadcom, with promising prospects ahead that may extend to its association with VMware.
Nvidia (NVDA)
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Nvidia’s market capitalization continues to soar, nearing the \(2 trillion mark by the end of 2024 from its current \)1.8 trillion valuation and 34-forward P/E ratio.
Renowned for its GPUs and their pivotal role in AI advancements, Nvidia has a rich history dating back to the introduction of GPU chips in 1999. Leveraging these GPUs, Nvidia revolutionized the gaming industry, with its entertainment segment reporting a remarkable 81% year-over-year growth, surpassing $2.86 billion in revenue in Q3 FY24.
While AI remains a primary revenue driver for Nvidia, the company’s diverse business segments offer investors exposure to high-growth opportunities beyond AI.
Marc Guberti, a respected finance writer at InvestorPlace.com, has provided insights on SMCI, AVGO, and NVDA in this article. His views align with the publication’s guidelines, reflecting his expertise and analysis in the finance domain.
