The AI sector has significantly boosted the tech industry, attracting investors with innovative technology advancements promising substantial returns. Stocks linked to generative AI have surged, potentially marking the start of a significant industry uptrend.
Investing in AI stocks remains viable despite recent surges. Spending on AI tech is projected to skyrocket, offering ample growth opportunities for new entrants in the market. For example, analysts fond of AI are now looking beyond giants like Nvidia (NASDAQ:NVDA).
These three undervalued AI stocks I’m about to discuss boast strong growth, key tech partnerships, and strategic acquisitions. Such factors place them in a unique position for tech sector prominence and potential high returns.
Super Micro Computer (SMCI)
One of the biggest and top-performing AI stock striding alongside Nvidia, Super Micro Computer (NASDAQ:SMCI) is an AI stock to buy and hold. In 2023, the company’s sales rose 37%. Forecasts suggest future revenue increases could come in around 110%, with earnings likely to surge more than 100% in 2024.SMCI holds a significant 10% share in the AI server market, poised to potentially increase to 17% as the market expands by 150%, per Bank of America.
Super Micro recently experienced a significant pullback after a volatile period in March and April, despite its remarkable rise of over 1,800% over the past two years. This downturn, though alarming to recent investors, might present an opportunity rather than a catastrophic decline. Concerns over AI demand and stock valuation drove some to sell, yet the fundamentals suggest potential for recovery.
With ongoing strong demand expected in AI, Super Micro’s unique technologies like liquid cooling and modular server design could bolster its position in the data center market.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) excels in diverse sectors, notably AI with Microsoft Cloud and Copilot driving growth. These factors have allowed the company to see $35.1 billion in revenue in Q3 2024 alone. Analysts rate this stock as a strong buy with 11% upside, reflecting consistent market outperformance and a robust financial performance trend.
Recently, IAS and Microsoft extended their partnership from 2020, focusing on post-bid brand safety, view-ability, and traffic measurement in Microsoft’s ad tools. This allows advertisers to verify engagement and media quality using IAS metrics alongside Microsoft’s audience data.
Microsoft also recently announced its 2024 Partner of the Year Awards, recognizing global contributions from its partners. Selected from 4,700 nominations across 115 countries, winners were celebrated across various industries. Nicole Dezen, Microsoft’s chief partner officer, highlighted the record-breaking submissions, emphasizing collaboration’s strength and community growth.
Other category winners included EY, JourneyTeam, PwC, Lenovo, and Nvidia, with Dell Technologies, Elastic, KPMG, RSM, Softchoice, and Version 1 as runners-up. Nicole Dezen emphasized the awards’ prestige, celebrating partners’ exceptional contributions and impactful innovations in business transformation and social impact.
Oracle (ORCL)
Currently expanding drastically in global data center footprint, Oracle (NASDAQ:ORCL) is one of the most promising AI companies to consider. With its strong financial standing, Oracle aims to capitalize more on the AI trend and plans to power its data centers with renewable energy in 2025. The company’s impressive commitment to invest in its AI capabilities certainly places Oracle at the center of this discussion. At least, that’s my view.
On June 27, ORCL saw double-digit gains after its Q4 earnings report. Although results came in below expectations, investors believe that the company’s forward guidance will propel new cloud partnerships with big tech companies like Alphabet (NASDAQ:GOOG) and Microsoft. Oracle also expects strong demand on its Oracle Cloud Infrastructure, anticipating strong sales growth in 2025.
Mashreq, a top MENA financial institution, extended its Oracle Financial Services partnership to boost global expansion. The agreement involves upgrading core banking systems for enhanced operations in global hubs like Hong Kong, the U.S., and the UK. Mashreq also plans greenfield digital banks in Pakistan and Oman, integrating Oracle solutions for operational efficiency and compliance.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.