While the market is trading near all-time highs, the options for buying great stocks at a discount tend to shrink. But there are still attractive stocks to buy right now if you know where to look.
One place to look is quickly growing sectors that show no signs of slowing down, such as artificial intelligence (AI). Here are two no-brainer AI stocks worth a closer look right now.
Image source: Getty Images.
1. Nvidia
If there has been one prevailing theme this earnings season, it is that the race for AI infrastructure is far from over. Large hyperscalers (owners of huge data centers) have set massive capital expenditure (capex) budgets for this year to continue to aggressively build out their data center infrastructure to meet growing demand for AI.
One of the companies best positioned to benefit from this is Nvidia (NVDA 1.21%). The chipmaker's graphics processing units (GPUs) remain the primary growth engine of AI infrastructure, while it is now providing full-scale end-to-end server solutions with the help of its networking portfolio.
NASDAQ: NVDA
Key Data Points
While Nvidia is seeing some increased competition from custom AI ASICs (application-specific integrated circuits), these hardwired chips lack the flexibility and adaptability of GPUs in a fast-changing AI landscape. Meanwhile, the company's recent talent acquisition and technology licensing deal with X's Groq help set it up well in a world where inference is starting to become increasingly important.
With the stock trading at an attractive valuation, having a forward price-to-earnings (P/E) ratio of just 24 times, Nvidia is a no-brainer buy at current levels.
2. Micron Technology
For GPUs to perform at their best, they need to be packaged with high bandwidth memory (HBM), which is a specialized form of DRAM (dynamic random access memory). This is because HBM lets GPUs offload and retrieve data much more quickly, so it doesn't slow down its processing capabilities.
NASDAQ: MU
Key Data Points
Given the massive AI infrastructure buildout, HBM unsurprisingly is in high demand. However, at the same time, supply is constrained because manufacturing HBM requires upwards of three times the wafer capacity of regular DRAM. This is leading to DRAM prices soaring at a time when demand is continuing to increase rapidly.
One of the best ways to play this trend is with Micron Technology (MU 2.89%), which is one of the three big DRAM memory makers, along with Korean companies SK Hynix and Samsung. The company's HBM production is sold out. And while it is increasing its own capex to try to keep up with demand, the market is likely to remain very tight for the foreseeable future. Meanwhile, with DRAM skyrocketing, Micron is seeing both huge revenue growth and massive gross margin expansion.
With the company's products in the midst of a supercycle and the stock trading at a forward P/E under 12 times, Micron is a no-brainer buy at the moment.
