There are several catalysts driving the stock market to record highs right now. These include expectations for lower interest rates, a resilient economy, strong corporate earnings, and a bull run in commodity prices with gold at an all-time high. However, no catalyst has provided more rocket fuel to stocks over the past year than artificial intelligence.
The mere mention of AI on an earnings call is enough to push a stock higher these days. Companies large and small are racing to adopt AI technologies and achieve efficiencies from them, as well as to use AI to drive new revenue streams and boost sales. Future growth in this burgeoning area of technology is expected to be explosive.
Precedence Research forecasts that the global AI market will swell from $454.12 billion in annual revenues during 2022 to $2.58 trillion by 2032, for a compound annual growth rate (CAGR) of 19%. That growth is likely to keep momentum behind certain stocks over a very long time. With AI in mind, here are three stocks that could turn your portfolio into a cash cow.
Micron Technology (MU)
Shares of Micron Technology (NASDAQ:MU) are up 16% after the company delivered financial results that beat Wall Street forecasts and provided guidance that shows continued growth from AI. Micron, which makes memory storage for computers and specializes in USB flash drives, reported earnings per share of 42 cents. That was much better than a loss of 25 cents expected among analysts.
Revenue in what was Micron’s fiscal second quarter was also better than forecast at $5.82 billion. However, what really has MU stock rising is that management said the company is benefitting from the current AI boom, with demand for its memory and computer data storage products at an all-time high. Micron provides memory and storage for AI systems around the world, including those being developed by Nvidia (NASDAQ:NVDA).
Astera Labs (ALAB)
Another way to play the AI trade is with brand new stock Astera Labs (NASDAQ:ALAB). The company that makes semiconductor-based connectivity products and operates in the AI space just held its initial public offering on March 20 and its share price has been soaring. A day after its market debut and ALAB stock has doubled from its IPO price of $36 a share. Demand for this stock appears to be red hot.
Astera Labs is heavily involved in the AI microchip and semiconductor sector, with current clients that include Nvidia and Advanced Micro Devices (NASDAQ:AMD). While Astera is unprofitable, its earnings are moving in the right direction. The company’s sales rose by 45% year-over-year in 2023 to $115.8 million, up from $79.9 million in 2022. Projections are for more growth ahead.
Super Micro Computer (SMCI)
When it comes to Super Micro Computer (NASDAQ:SMCI), it appears that resistance is futile. Can anything stop this runaway stock? Up 241% year-to-date and having gained 778% in the last 12 months, SMCI stock keeps on rolling. The shares were recently added to the benchmark S&P 500 index. Investors can’t get enough of this stock, which is yet another AI play.
In addition to being connected to AI, Super Micro Computer is similar to Micron and Astera Labs. The stock is benefitting from its association with Nvidia. Super Micro Computer makes data centers that power AI models and applications. SMCI stock took off last year after the company formed a partnership with Nvidia. Super Micro Computer’s market capitalization has since soared from $4.50 billion in 2022 to $55 billion today.
On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.