AI Stocks: A Decade-Long Investment Opportunity in Tech

2 Tech Stocks You Can Buy and Hold for the Next Decade

The Nasdaq-100 Technology Sector index has delivered impressive gains of 414% in the past decade, outperforming the S&P 500 index's gains of 185% by a huge margin. A key reason why technology stocks have outperformed the S&P 500 during this period is because of their ability to deliver impressive growth as they can capitalize on disruptive trends. This is precisely why it would be a good idea for investors to buy and hold top tech stocks for the long run. Super Micro Computer (NASDAQ: SMCI) and Oracle (NYSE: ORCL) are two tech stocks that are benefiting from artificial intelligence (AI), the latest disruption in the tech world that is impacting multiple industries and is expected to contribute significantly to the global economy. Let's look at the reasons why buying and holding these tech stocks for the next decade could turn out to be a smart move. 1. Super Micro Computer Super Micro Computer manufactures server and storage solutions, and the stock has been on fire in 2024 with stunning gains of 208% already. However, Super Micro Computer still remains a top tech stock to buy and hold for the next decade because of three simple reasons. First, the company is operating in a market that has received a massive boost thanks to AI. According to Statista, the market for AI servers is forecast to generate a humongous $430 billion in revenue in 2033 as compared to $31 billion last year. That translates into a compound annual growth rate of 30%. The second reason to buy Supermicro is that it is becoming a key player in this lucrative market. That's evident from the fact that it's growing at a faster pace than the AI server market. The company's revenue for fiscal year 2024 (which ended on June 30) is expected to land at $14.9 billion, which would be more than double the $7.1 billion revenue it generated in the previous fiscal year. The fact that Supermicro is outperforming the AI server market is an indication that it is becoming the go-to provider of AI server solutions. As it turns out, Supermicro is also outperforming established players such as Dell Technologies. More importantly, KeyBanc analyst Thomas Blakey expects Supermicro's AI server market share to increase to 23% this year, a level it will likely sustain in the future thanks to its competitive advantages. If that's indeed the case, Supermicro's revenue could increase significantly in the long run thanks to the potential size the AI server market is expected to attain. This brings us to the third reason why buying this stock looks like a no-brainer now in light of the potential growth that it could deliver. Super Micro is trading at just 4.4 times sales right now, which is lower than the Nasdaq-100 Technology Sector's sales multiple of 7.4. Also, its forward earnings multiple of 25 is lower than the index's reading of almost 30. With Supermicro's earnings expected to clock an annual growth rate of 62% over the next five years, buying this AI stock looks like a smart move. 2. Oracle The proliferation of AI is lifting Oracle's boat as well. This is evident from the company's recent quarterly reports, which point toward an improvement in the demand for its cloud infrastructure offerings. For instance, Oracle's remaining performance obligations (RPOs) in the fourth quarter of fiscal 2024 (which ended on May 31) increased 44% year over year to $98 billion. That was faster than the 29% year-over-year increase in its RPO in fiscal Q3 to $80 billion. This faster increase in Oracle's RPO -- which refers to the value of a company's future contracts that are yet to be fulfilled -- points toward an improvement in its future revenue pipeline. Management expects its revenue pipeline to keep improving due to the growing demand for cloud-based AI services. According to a statement by CEO Safra Catz: "Throughout fiscal year 2025, I expect continued strong AI demand to push Oracle sales and RPO even higher -- and result in double-digit revenue growth this fiscal year. I also expect that each successive quarter should grow faster than the previous quarter -- as OCI capacity begins to catch up with demand." It is worth noting that Oracle's revenue in fiscal 2024 increased 6% year over year to $53 billion. So, the forecast for double-digit growth in the new fiscal year suggests that AI is indeed set to drive stronger growth for the company. Another important point to note here is that Oracle signed more than 30 AI sales contracts worth more than $12.5 billion in the previous quarter. That number is very close to the $14.3 billion revenue that the company generated in fiscal Q4. AI, therefore, is already driving the needle in a significant way for Oracle. The good part is that this trend is here to stay as the demand for cloud AI services is forecast to take off significantly in the long run. Fortune Business Insights estimates that the cloud AI market could grow from $60 billion last year to almost $398 billion in 2030, clocking a compound average growth rate of nearly 31%. As a result, Oracle's cloud business has a lot of room for future growth, which should positively impact the company's overall business development. Not surprisingly, analysts are forecasting healthy double-digit earnings growth from Oracle over the next three fiscal years following a tepid increase of just 8% in the previous fiscal year to $5.56 per share. ORCL EPS Estimates for Current Fiscal Year data by YCharts With Oracle stock trading at just 23 times forward earnings right now, a discount to the Nasdaq-100's multiple, now would be a good time to go long. Thanks to the multibillion-dollar opportunity in the cloud AI market, it could deliver more gains over the coming decade. The stock is already up 35% in 2024, and it won't be surprising to see it head higher thanks to the stronger growth it is expected to deliver. Should you invest $1,000 in Super Micro Computer right now? Before you buy stock in Super Micro Computer, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Super Micro Computer wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $722,626!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

3 AI Stocks to Buy for "One of the Largest Investment Opportunities in Human History," According to Certain Wall Street Analysts

In June, Swiss investment bank UBS published a report that estimated artificial intelligence (AI) will add $1.2 trillion annually to the global economy by 2027. The analysts divided the AI value chain into three layers: The report also predicted that "AI will be the most profound innovation and one of the largest investment opportunities in human history." The application layer probably offers the greatest monetization potential over time, but UBS believes companies in the enabling layer will be the biggest beneficiaries during the next three years. Nvidia's graphics processing units (GPUs) are the industry standard in accelerating complex data center workloads like AI applications. Forrester Research recently wrote, "Nvidia sets the pace for AI infrastructure worldwide. Without Nvidia GPUs, modern AI wouldn't be possible." Nvidia has cemented its leadership and enhanced its ability to monetize AI by branching into other product categories. Its portfolio includes adjacent hardware, like central processing units (CPUs) and networking equipment, as well as subscription software and cloud services that support AI application development. Toshiya Hari at Goldman Sachs sees that as a key differentiator. "We believe Nvidia will remain the de facto industry standard for the foreseeable future given its competitive advantage that spans hardware and software capabilities," he wrote in a note to clients. "Nvidia's annual introduction of new products and platforms sets a pace of innovation that keeps it at the forefront of the industry." Wall Street expects Nvidia to grow non-GAAP (generally accepted accounting principles) earnings per share at 38% annually through fiscal 2027 (ends January 2027). That consensus estimate makes its current valuation of 66.7 times adjusted earnings look tolerable. Investors should feel comfortable buying a small position in this semiconductor stock today. 2. Broadcom Broadcom provides a broad range of IT solutions, but the company is best known for its leadership in data center networking chips (for switches and routers) and application-specific integrated circuits (ASICs). Specifically, Broadcom holds 80% market share in data center networking chips and at least 55% market share in ASICs. Demand for AI should be a tailwind in both cases. Switches and routers move information between data center servers and other networks, and their ability to do so depends on semiconductor throughput. Due to the enormous amount of data involved, fast chips are essential where AI applications are concerned, and Broadcom has the fastest chips on the market. JPMorgan Chase says spending on data center networking chips will grow 20% to 30% annually over the next few years. ASIC refers to bespoke silicon designed for specialized use cases like AI. For instance, Broadcom helps Alphabet's Google and Meta Platforms build custom AI chips, and it recently announced a third (unnamed) customer that could be Amazon, Apple, or TikTok parent ByteDance, according to various analysts. ASICs represent less than 10% of AI chips today, but UBS says the market will outpace GPU sales in the coming years, such that ASICs account for 30% of AI chips by 2027. Wall Street expects Broadcom to grow non-GAAP earnings per share at 21% annually through fiscal 2027 (ends October 2027). That estimate makes its current valuation of 36.7 times adjusted earnings look quite reasonable. Patient investors should feel comfortable buying a few shares of Broadcom stock today. 3. Super Micro Computer Super Micro Computer builds high-performance computing platforms for data centers. Its portfolio includes servers and storage systems optimized for use cases like analytics and AI, as well as server management software and server subsystems (chassis, motherboards, power supplies) that can be assembled into complete solutions. Supermicro is the leader in AI servers, and its market share is climbing due to its in-house manufacturing capabilities and modular approach to product design. To elaborate, the company can quickly build a broad range of servers featuring the latest chips by using common building blocks, and it assembles most of those servers internally in Silicon Valley. That enables rapid prototyping and product roll-out. Indeed, Supermicro can usually bring new technologies to market before its competitors, often two to six months earlier. Hans Mosesmann at Rosenblatt Securities recently highlighted that advantage. "Super Micro has developed a model that is very, very quick to market. They usually have the widest portfolio of products when a new product comes out from Nvidia or AMD or Intel." Supermicro accounted for 10% of AI server sales in 2023, but Bank of America analysts expect that figure to reach 17% by 2026. Tom Blakely at KeyBanc is even more optimistic. He thinks Supermicro could capture a 23% market share in AI servers by 2025. Either way, those forecasts bode well for shareholders. JPMorgan Chase says the AI server market will grow 460% between 2023 and 2027. Wall Street expects Supermicro's non-GAAP earnings per share to increase 41% annually through fiscal 2026 (ends June 2026). That consensus estimate makes its current valuation of 42.3 times adjusted earnings look reasonable. As a caveat, investors should watch competitors like Dell Technologies and Hewlett Packard Enterprise to ensure Supermicro maintains its market share. But I believe Supermicro shareholders will be rewarded with market-beating returns over the next three years. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $741,989!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Bank of America, Goldman Sachs Group, JPMorgan Chase, Meta Platforms, and Nvidia. The Motley Fool recommends Broadcom and Intel and recommends the following options: long January 2025 $45 calls on Intel and short August 2024 $35 calls on Intel. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

3 AI Stocks to Buy for "One of the Largest Investment Opportunities in Human History," According to Certain Wall Street Analysts | The Motley Fool

Rapid growth in artificial intelligence revenue puts investors in front of a once-in-a-lifetime opportunity. In June, Swiss investment bank UBS published a report that estimated artificial intelligence (AI) will add $1.2 trillion annually to the global economy by 2027. The analysts divided the AI value chain into three layers: The report also predicted that "AI will be the most profound innovation and one of the largest investment opportunities in human history." The application layer probably offers the greatest monetization potential over time, but UBS believes companies in the enabling layer will be the biggest beneficiaries during the next three years. Chipmakers Nvidia (NVDA -2.61%) and Broadcom (AVGO -1.98%) and server manufacturer Super Micro Computer (SMCI -0.60%) fall into that category. Nvidia's graphics processing units (GPUs) are the industry standard in accelerating complex data center workloads like AI applications. Forrester Research recently wrote, "Nvidia sets the pace for AI infrastructure worldwide. Without Nvidia GPUs, modern AI wouldn't be possible." Nvidia has cemented its leadership and enhanced its ability to monetize AI by branching into other product categories. Its portfolio includes adjacent hardware, like central processing units (CPUs) and networking equipment, as well as subscription software and cloud services that support AI application development. Toshiya Hari at Goldman Sachs sees that as a key differentiator. "We believe Nvidia will remain the de facto industry standard for the foreseeable future given its competitive advantage that spans hardware and software capabilities," he wrote in a note to clients. "Nvidia's annual introduction of new products and platforms sets a pace of innovation that keeps it at the forefront of the industry." Wall Street expects Nvidia to grow non-GAAP (generally accepted accounting principles) earnings per share at 38% annually through fiscal 2027 (ends January 2027). That consensus estimate makes its current valuation of 66.7 times adjusted earnings look tolerable. Investors should feel comfortable buying a small position in this semiconductor stock today. Broadcom provides a broad range of IT solutions, but the company is best known for its leadership in data center networking chips (for switches and routers) and application-specific integrated circuits (ASICs). Specifically, Broadcom holds 80% market share in data center networking chips and at least 55% market share in ASICs. Demand for AI should be a tailwind in both cases. Switches and routers move information between data center servers and other networks, and their ability to do so depends on semiconductor throughput. Due to the enormous amount of data involved, fast chips are essential where AI applications are concerned, and Broadcom has the fastest chips on the market. JPMorgan Chase says spending on data center networking chips will grow 20% to 30% annually over the next few years. ASIC refers to bespoke silicon designed for specialized use cases like AI. For instance, Broadcom helps Alphabet's Google and Meta Platforms build custom AI chips, and it recently announced a third (unnamed) customer that could be Amazon, Apple, or TikTok parent ByteDance, according to various analysts. ASICs represent less than 10% of AI chips today, but UBS says the market will outpace GPU sales in the coming years, such that ASICs account for 30% of AI chips by 2027. Wall Street expects Broadcom to grow non-GAAP earnings per share at 21% annually through fiscal 2027 (ends October 2027). That estimate makes its current valuation of 36.7 times adjusted earnings look quite reasonable. Patient investors should feel comfortable buying a few shares of Broadcom stock today. Super Micro Computer builds high-performance computing platforms for data centers. Its portfolio includes servers and storage systems optimized for use cases like analytics and AI, as well as server management software and server subsystems (chassis, motherboards, power supplies) that can be assembled into complete solutions. Supermicro is the leader in AI servers, and its market share is climbing due to its in-house manufacturing capabilities and modular approach to product design. To elaborate, the company can quickly build a broad range of servers featuring the latest chips by using common building blocks, and it assembles most of those servers internally in Silicon Valley. That enables rapid prototyping and product roll-out. Indeed, Supermicro can usually bring new technologies to market before its competitors, often two to six months earlier. Hans Mosesmann at Rosenblatt Securities recently highlighted that advantage. "Super Micro has developed a model that is very, very quick to market. They usually have the widest portfolio of products when a new product comes out from Nvidia or AMD or Intel." Supermicro accounted for 10% of AI server sales in 2023, but Bank of America analysts expect that figure to reach 17% by 2026. Tom Blakely at KeyBanc is even more optimistic. He thinks Supermicro could capture a 23% market share in AI servers by 2025. Either way, those forecasts bode well for shareholders. JPMorgan Chase says the AI server market will grow 460% between 2023 and 2027. Wall Street expects Supermicro's non-GAAP earnings per share to increase 41% annually through fiscal 2026 (ends June 2026). That consensus estimate makes its current valuation of 42.3 times adjusted earnings look reasonable. As a caveat, investors should watch competitors like Dell Technologies and Hewlett Packard Enterprise to ensure Supermicro maintains its market share. But I believe Supermicro shareholders will be rewarded with market-beating returns over the next three years.