The recent pullback in artificial intelligence (AI) and the semiconductor sector has presented investors with another entry point as the stock market heads into July, a month that has brought positive performance for the previous 16 years.
With this in mind, Finbold analyzed the ongoing trends and tracked down the two best investments in the AI sector for the upcoming month.
Micron (NASDAQ: MU)
Micron Technology (NASDAQ: MU), a leading supplier of dynamic random-access memory (DRAM) and non-volatile memory (NAND) used in PCs and data centers, has seen its stock soar 72% this year. This surge is mainly due to the exploding demand for high-performance memory modules from AI servers.
Picks for you
The memory and storage markets are known for their cyclical swings in demand and pricing. Last year, the semiconductor industry experienced an 8% revenue decline, primarily due to falling memory prices. However, AI technology is now pulling Micron out of this slump, as the most recent Q3 report revealed a revenue increase of 82% year-over-year.
Micron’s bottom line has significantly improved due to the short supply of high-performance memory chips. In the fiscal third quarter, the company reported a $0.62 earnings-per-share. Strong demand from the data center market is expected to support favorable pricing trends and further boost the company’s earnings growth.
The current report surpassed expectations while falling in line with the growth outlook, causing the MU stock to slump 6% in the pre-market.
Nevertheless, Wall Street analysts assign MU shares a “strong buy” rating. Of 21 experts, 19 opted for a “buy” recommendation, two advised investors to “hold,” and none pointed towards a “sell.”
The average price target for MU stock indicates a further 10.39% upside at $157.15 from the current price levels.
Amazon (NASDAQ: AMZN)
E-commerce and cloud-computing giant Amazon (NASDAQ: AMZN) is one of the top business picks. The company’s diversified business model, strong brand recognition, and robust financial profile make it an ideal choice for growth investors, as the company recently reached a $2 trillion valuation and AMZN stock has closed last trading session at an all-time high of $193.61.
Over the past year, much of the discussion about Amazon has centered around its artificial intelligence advancements. While the company’s AI initiatives are noteworthy, Amazon may have additional strategic moves planned in the future.
Amazon’s revenue streams are diversified across several categories: online stores, physical stores, third-party seller services, advertising, subscriptions, cloud computing, and other services. According to the company’s financial filings, most of its operating income is derived from Amazon Web Services (AWS), its cloud computing division.
A detailed examination of Amazon’s financial statements highlights the company’s overall profitability. For the first quarter, which ended March 31, Amazon reported an operating income of $15.3 billion, marking a 219% increase year-over-year.
Additionally, free cash flow has surged to $50 billion on a trailing 12-month basis, and operating cash flow has increased by 82% over the same period, reaching $99.1 billion.
42 Wall Street analysts have reached a rare “buy” consensus on AMZN stock. They award AMZN shares a “strong buy” rating and set the average price target at $221.55, with a projected 14.43% upside.
These two companies take a unique approach to the ongoing AI revolution, making their stocks appealing choices among investors and giving them a clear-cut advantage over competitors.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
