AI Chip Stocks Set to Soar: Uncovering 3 Hidden Gems for Massive Growth in March
Table of Contents
- Introduction
- Stocks Jump After PCE and ISM Reports
- AI Chip Stocks Rally to New Highs
- Hidden Gem: A Potential AI Beneficiary
- The Musk-OpenAI Lawsuit: Exposing Secret Agreements
- Nasdaq Reaches New Highs, What's Next for March?
- Wall Street Analysts' Predictions for March
- The Rise of AI Stocks: Nvidia and AMD
- Dell: An Unexpected Player in the AI Boom
- Snowflake's Earnings Report: Beat Expectations but Falls Short on Guidance
- Pure Storage: An Upcoming AI Analysis
- Conclusion
🚀 Introduction
Hello everyone, I'm Xiao Luo, and welcome to Rocket US Stocks Channel. This week, we witnessed a surge in the US stock market after the release of PCE and ISM reports. Notably, AI chip stocks experienced a collective frenzy on Thursday and Friday, with companies like Nvidia and AMD reaching Record-high stock prices. But is there still an opportunity to enter these stocks? In this article, I will analyze various AI concept stocks and uncover three potential AI beneficiaries that are primed for explosive growth in March.
💥 Stocks Jump After PCE and ISM Reports
The latest PCE and ISM reports had a significant impact on the US stock market, resulting in a jump in stock prices. This surge was particularly evident in AI chip stocks, including Nvidia and AMD, which experienced remarkable growth on Thursday and Friday. AMD, for instance, saw a 14% increase in stock price, pushing its market value to a new high of $300 billion. The entire semiconductor industry benefited from this rally. However, the news surrounding AMD and other chip companies' business operations remained relatively quiet. The question arises: what could be the cause of this bullish Momentum? It seems that the positive news originated from a well-established hardware company: Dell. Let's dive deeper into Dell's AI business and examine the details of its recent earnings report.
⭐ Hidden Gem: A Potential AI Beneficiary
Dell, often overlooked by the market, has emerged as a hidden gem in the AI industry. In its Q4 and FY2024 earnings report released on Thursday, the company reported a total revenue of $88.4 billion, representing a 14% year-over-year decline. However, Dell successfully increased its net income by 32% to $3.195 billion, with an impressive earnings per share of $4.36, a significant 35% increase. The most remarkable revelation from the report was the robust performance of Dell's AI-optimized server business, with nearly 40% sequential growth in orders and a doubling backlog. Dell is expanding its product portfolio to meet the demands of various platforms, including cloud computing, on-premises computing, and edge computing. It is worth noting that Dell's AI servers are equipped with chips from both AMD and Nvidia, and this announcement further bolstered Wall Street's outlook on AMD's AI chip business. Moreover, Dell emphasized its collaboration with Nvidia, stating that its AI servers will incorporate AMD's latest chip, the MI300. As previously analyzed in my video on Nvidia's earnings, Nvidia still holds a dominant position in the AI chip market, with a market share exceeding 90%. Wall Street's high growth expectations for AMD in the AI chip market stem from the economic principle that no company can maintain a monopolistic market share indefinitely. Therefore, AMD is considered the most promising company poised to grab a significant share of the AI chip market. However, it is important to note that AMD's current high stock price already reflects its anticipated future growth. If the upcoming quarterly reports fail to meet expectations, a significant downturn could occur. Interestingly, the AI beneficiary that is likely to experience explosive growth, as Mentioned earlier, is Dell, not AMD.
🔍 Dell: An Unexpected Player in the AI Boom
Dell has been strategically positioning itself in the AI industry for a long time. In Michael Dell's keynote speech at the 2018 Dell Technologies Summit, he compared AI to a rocket and emphasized the importance of data as fuel. Dell has made extensive and in-depth investments in the AI field, which can be roughly divided into two key areas. Firstly, Dell incorporates AI into its various product portfolios to enhance performance and user experience. This includes AI laptops and AI enterprise data storage. Secondly, Dell has established long-term partnerships with leading hardware companies in the AI industry, including Nvidia, AMD, and Intel, to build an ecosystem collaboratively. The collaboration between Dell and Nvidia has spanned 25 years, starting from Dell Dimension to the Present. The growing AI server business mentioned in Dell's earnings report is the result of this partnership. The PowerEdge server, launched last year, is the product of Dell's collaboration with Nvidia, equipped with eight GPUs specifically designed for AI and machine learning. It allows for the rapid development and training of large-Scale machine learning models like ChatGPT. CoreWeave, an AI infrastructure company, has purchased thousands of Dell PowerEdge servers to provide Generative AI services to its clients. Jeff Clarke from Dell stated that AI is a powerful and transformative tool applicable to businesses of all sizes, provided they have the correct IT infrastructure in place. This indicates that Dell's AI servers will become the go-to IT infrastructure for companies looking to upgrade their AI capabilities. Analyzing the situation, Dell's stock price surged by 14% after hours on Thursday and continued its explosive growth, reaching a remarkable 31% increase on Friday. Its price-to-earnings ratio currently stands at 27 times, demonstrating the market's confidence in its AI infrastructure business. In comparison, Super Micro Computer Inc. (SMCI), another AI-focused company, has a price-to-earnings ratio of 71 times. The third stock to be analyzed in this article is Snowflake, a data cloud platform company held by Berkshire Hathaway.