These stocks have plenty of room to run.
Artificial intelligence (AI) stocks have roared higher in recent times — and for good reason. This exciting technology already is driving enormous revenue growth at companies making AI products and services — and customers are investing in these tools due to the promise of AI to revolutionize their businesses. For example, AI may accelerate the development of new and better drugs or make vehicles safer and easier to operate.
Investors, recognizing this promise, have piled into AI stocks, and these players have helped the S&P 500 index climb nearly 20% so far this year. Though companies in the field of AI have seen their shares soar, it’s not too late to get in on many compelling players. In fact, it’s a great time to invest in two in particular — my prediction is these AI companies are about to see massive growth. Let’s check them out.
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1. Palantir Technologies
Palantir Technologies (PLTR 1.00%) helps its customers aggregate their complex web of data and put it to work — so they can integrate this data into their strategies and harness its power to make key decisions. For most of its history, the 20-year-old company counted on government contracts to drive revenue growth. But, in recent times, a new growth driver has emerged.
Palantir’s commercial business has taken off, helped by the company’s investment in AI. Last year, Palantir launched its Artificial Intelligence Platform (AIP), an AI-powered system that helps customers quickly zoom in on their data and discover how it can help advance their business goals. The company even has created a genius way of selling the platform to potential customers — by holding bootcamps that allow them to get a taste of its capabilities.
And this long-established company’s new bet is paying off. AIP is driving revenue in the government and commercial businesses — and commercial now is its highest-growth business. In the most recent quarter, U.S. commercial revenue advanced 55% compared with a 24% gain for U.S. government revenue. Palantir had only 14 commercial clients four years ago, and today it has nearly 300, illustrating the progress made in a short period of time.
AIP’s rather recent launch, the high demand for the platform, and the commercial numbers we’ve seen so far suggest that explosive growth for Palantir may be right around the corner. And that means the stock could have plenty of room to run — even after recent gains — over the long haul.
2. Super Micro Computer
Super Micro Computer (SMCI 4.59%) is a key behind-the-scenes player in the world of AI. The company makes the equipment crucial to the operations of AI data centers — from workstations to full-rack scale solutions. Supermicro isn’t the only equipment maker around, but it has managed to grow five times faster than the industry average over the past 12 months.
The reason for the company’s success? It works hand-in-hand with the world’s top chip designers — including market leader Nvidia — in order to immediately integrate their innovations into its products. Supermicro’s building blocks technology — with most products involving similar parts — also favors speed. So, customers know they can quickly get a product tailored to their data centers with the latest technology when they order from Supermicro.
This has driven major growth at the equipment company, with quarterly revenue this year soaring past the level of annual revenue as recently as 2021. In the most recent quarter, revenue came in at $5.3 billion, a gain of more than 140% year over year.
On top of this, a new wave of growth may be ahead. Supermicro is well positioned to solve one of the biggest problems facing AI data centers, and that’s the accumulation of heat. This is thanks to the company’s direct liquid cooling (DLC) technology. Supermicro says that over the coming 12 months, as much as 30% of new data centers will be equipped with DLC — and Supermicro will dominate that market.
So, my prediction is this equipment giant that already has delivered growth is heading for yet a new wave of lasting revenue gains — and that’s reason to be optimistic about its stock performance over the long term.
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
