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With the artificial intelligence boom showing no signs of cooling off, there’s still time to buy some of the top strong buy AI stocks.
For one, by 2026, the global AI market could be worth about $228.3 billion, according to Global Industry Analysts. By 2030, it could be closer to $1.81 trillion, according to Grand View Research. In addition, artificial intelligence-related spending will make up about 8% to 10% of IT budgets in 2024, according to Wedbush.
Two, Apple (NASDAQ:AAPL) just jumped into the AI boom, announcing it introduced a range of new AI features, including an upgrade to its voice assistant Siri, integration with Open AI’s Chat GPT, and new writing assistance tools. Three, AI is impacting just about every industry, including real estate investment trusts (REIT) that own data storage facilities. Even utility companies are getting swept up in the story, with data center power demand expected to double by 2030.
Until the AI boom starts to cool off – which won’t happen any time soon – AI-related stocks could easily rally even higher, including:
Nvidia (NVDA)
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One of the top must-own, strong buy AI stocks on the market is Nvidia (NASDAQ:NVDA).
After splitting 10:1, the AI industry’s 800 lb. gorilla trades at just $130 now. In the immediate term, Susquehanna analysts say NVDA could test $160 a share. Rosenblatt analysts say NVDA could rally to $200 with a buy rating. In the longer term, NVDA could rally back to $1,000. All thanks to strong demand for its AI chips.
Earnings have been – and should continue to be strong. In its most recent quarter, NVDA’s first quarter revenue jumped 262% year over year to $26.04 billion. That was well ahead of estimates for $24.65 billion. Adjusted earnings per share jumped 461% to $6.12, soaring above estimates for $5.50. Even adjusted gross margins of 78.9% were above expectations of 77.2%.
Even guidance was expectedly strong. For the second quarter, NVDA’s projected revenue of $28 billion is above expectations of $26.6 billion. Adjusted gross margins could come in around 75.5%, which is also above estimates for 75.2.%.
In short, at $130 a share, post-split, NVDA is the top strong buy AI stock.
Advanced Micro Devices (AMD)
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While Advanced Micro Devices (NASDAQ:AMD) has been struggling, analysts have it rated as another top strong buy AI stock. The current 12-month average price target is $191.03. At the high end, there are estimates for $235 a share.
Analysts at Citi (NYSE:C) say AMD could take about 10% of the data center graphics processing units (GPU) market. “We believe AMD is using an annual product cadence to keep pace with Nvidia, and we still expect AMD to get 10% share of the data center GPU market or roughly $15.0 billion,” Citi noted. The firm also reiterated a buy rating with a $176 price target.
Analysts at Edward Jones also initiated coverage of AMD with a buy rating, citing growing demand for data center infrastructure. All of which should boost AMD’s GPUs and central processing units (CPUs).
Helping, AMD says AI chip sales could come in around $4 billion for the year, which is up from the $3.5 billion projected in January. However, I strongly believe that number will come in even higher given the surging, unstoppable demand for all things AI-related.
In short, use weakness as a long-term buying opportunity for AMD.
Micron (MU)
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There’s also Micron (NASDAQ:MU), which has a consensus strong buy rating, with an average price target of $153.65. The highest price target is $225. Helping, Bank of America just added the stock to its US 1 List, which is a collection of the firm’s best investment ideas. UBS also reiterated its buy rating on Micron.
Cantor Fitzgerald also says it expects to see beneficial artificial intelligence news in Micron’s latest earnings report. All as the AI boom fuels demand for high-bandwidth memory products.
While the stock is still hot – having run from about $90 to $153.34 since March – I’d wait for it to pull back before buying. Right now, it’s excessively overbought on RSI, MACD and Williams’ %R and is overdue for profit taking. In fact,every time these three indicators get this deep in overbought territory, the MU stock pivots lower temporarily.
Again, don’t rush to buy Micron just yet. Let it cool off and then buy it for the long haul.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.
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