By now, most investors know that artificial intelligence (AI) stocks are dominating the stock market.
AI has emerged as the key theme driving the new bull market, and it's already created a number of big winners, including Nvidia, the maker of the graphics processing units (GPUs) that are the foundation of AI models like ChatGPT.
Most of the top CEOs in the tech industry think the AI revolution is still in its early innings, meaning many of the stocks that have already surged should keep gaining. Keep reading to see two AI stocks that doubled in the past year and could do so again.
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1. Super Micro Computer
There's doubling in a year, and then there's doing what Super Micro Computer (SMCI 3.59%) has done.
Shares of the maker of high-density servers that work especially well for AI applications have jumped more than 800% over the past year, fueled by soaring demand for its servers and storage solutions.
While you might think that it would be impossible for a stock like that to double again, there are a number of reasons Supermicro, as the company is also known, could jump another 100%.
First, Supermicro's business is soaring, with revenue up 103% in its most recent quarter, and even faster growth is projected over the remaining half of its fiscal year. Sales are doubling in spite of supply shortages as the company works closely with Nvidia to build customizable servers for its AI customers.
CEO Charles Liang said on the most recent earnings call that demand is still outstripping supply and that the company would be able to ship more product if supply improves -- and it is improving. Management also said that guidance was conservative because it is supply constrained, meaning that it could easily beat its guidance if its access to Nvidia's GPUs improves.
The stock also looks reasonably priced at a price-to-earnings ratio of 45 based on fiscal 2024's earnings estimates.
If Supermicro can outperform its guidance and stay ahead of the competition, the stock could have a lot of room to run. Doubling isn't out of the question, considering how fast Supermicro is growing and how large the opportunity in generative AI is.
2. Micron
Micron Technology (MU -0.51%), which is best known for making DRAM and NAND memory chips, has also soared over the last year. Its stock hasn't gone parabolic the way Supermicro's has, but shares of Micron are still up 103% over the past year.
Micron should benefit from a number of tailwinds over the next year that could help the stock double again.
First, it is starting to emerge from a downturn in the chip sector as the pandemic-driven boom in PCs, tablets, and gaming systems turned into a supply glut and falling prices in 2022 and 2023. Micron's recent second-quarter earnings report showed it has clearly turned the corner.
Revenue jumped 58% to $5.8 billion, and Micron flipped a wide loss in the year-ago quarter to an operating profit of $191 million. The company also called out AI as a key demand driver as CEO Sanjay Mehrotra said, "We believe Micron is one of the biggest beneficiaries in the semiconductor industry of the multiyear opportunity enabled by AI."
As Mehrotra explained on the earnings call, surging demand for AI servers is driving growth in high-bandwidth memory and data center solid-state drives, which is tightening the supply of memory chips, leading to increased prices for Micron's products.
It expects that trend to continue and is forecasting record revenue in fiscal 2025 with a significant improvement in profitability.
Micron is still cheaper than most other AI chip stocks, and if it can ramp up sales and take advantage of rising demand, the stock should continue moving higher. Considering the stock's breakout has only recently begun, putting up another double is within Micron's reach.
