2 Affordable AI Stocks: Potential upto 50% Growth

Nvidia can continue to expand steadily in the future to justify these high multiples, but there are many less expensive ways to ride the AI wave. You can think about purchasing Super Micro Computer (NASDAQ: SMCI) and Qualcomm (NASDAQ: QCOM), two reasonably valued AI stocks, at this time.

Super Micro Computer (NASDAQ: SMCI)

Super Micro Computer has been on an impressive streak in the AI stocks market, skyrocketing by a remarkable 587% over the past year, outperforming Nvidia by a significant margin. Despite this remarkable surge, the company, renowned for its AI server and storage solutions, continues to trade at very appealing levels.

Currently, Super Micro AI stocks is priced at just 3.3 times sales, presenting an enticing opportunity for investors. Not only is it significantly cheaper than Nvidia, but it is also experiencing rapid growth.

In its fiscal 2024 second-quarter results released on Jan. 29, Super Micro reported a remarkable performance. The company’s revenue more than doubled from the previous year to $3.66 billion last quarter, while its non-GAAP net income surged from $3.26 per share to $5.59 per share.

The impressive growth in revenue and earnings can be attributed to the swift adoption of AI servers. Super Micro has tailored its server solutions to meet the specific needs of AI servers, aiding data center operators in reducing electricity and cooling costs. Its server rack solutions are utilized for deploying AI chips from various vendors such as Nvidia, Intel, and Advanced Micro Devices.

Furthermore, the company is experiencing strong demand for its offerings, prompting it to focus on expanding its production capacity. CEO Charles Liang highlighted this on the recent earnings conference call, stating that production utilization rates are quickly rising, with new production facilities and warehouses being added to meet demand.

With the demand for AI servers projected to increase significantly in the coming years, Super Micro is poised for substantial growth. The company expects to achieve $14.5 billion in revenue by the end of fiscal 2024, representing a 106% increase over the prior year. This upward trajectory could potentially lead to a market capitalization of $48 billion, a 50% increase from current levels.

Given Super Micro’s strong growth prospects in the AI sector, investors seeking exposure to this market should consider seizing the opportunity before the stock climbs even higher.

Qualcomm (NASDAQ: QCOM)

Qualcomm shares have lagged behind the broader market in the past year, posting modest gains of only 5%. This subdued performance can be attributed to the mobile chipmaker’s lackluster financial results, largely impacted by weak smartphone sales. With Qualcomm heavily reliant on chipsets used in smartphones for over two-thirds of its revenue, the downturn in this segment inevitably affected its overall performance.

However, there’s optimism on the horizon for Qualcomm as the smartphone AI stocks market gears up for a turnaround in 2024. Recent data indicates a positive shift, with smartphone shipments experiencing an 8.5% increase in the fourth quarter of 2023, surpassing analysts’ expectations of 7.3% growth.

Projections from Morgan Stanley suggest that the global smartphone AI stocks market is poised to grow by 4% in 2024 and 4.4% the following year. The uptick in Q4 2023 hints at stronger smartphone sales growth this year, with artificial intelligence (AI) playing a pivotal role in driving enhanced performance.

Counterpoint Research forecasts that shipments of AI-powered smartphones could reach 100 million units in 2024, with annual shipments of AI-enabled smartphones expected to reach 522 million units by 2027, boasting an annual growth rate of 83% AI stocks.

Qualcomm is well-positioned to capitalize on this burgeoning opportunity, exemplified by its Snapdragon 8 Gen 3 chip powering AI features on Samsung’s latest Galaxy S24 Ultra smartphone. Furthermore, Qualcomm’s extended agreement with Samsung regarding Snapdragon platforms for flagship Galaxy smartphone launches from 2024 onwards positions it favorably in the nascent AI-enabled smartphone market, particularly considering Samsung’s prominent position as the world’s second-largest smartphone manufacturer.

Analysts have recently revised Qualcomm’s AI stocks revenue growth estimates upward, with AI poised to provide an additional boost, potentially surpassing analysts’ expectations in the future. Even with conservative estimates, if Qualcomm achieves $44 billion in annual revenue over the next few years and maintains its current sales multiple of 5, its market capitalization could surge to $220 billion, representing a 39% increase from current levels.

However, given the potential for accelerated revenue growth and increased AI stocks market recognition of its AI prospects, Qualcomm may experience even stronger gains in its stock price. Savvy investors would be wise to consider acquiring Qualcomm shares now to potentially capitalize on these favorable market dynamics.