Stock Split Watch: 2 Artificial Intelligence (AI) Stocks to Buy Now and Seem Ready for a Split - Latest Global News

Stock Split Watch: 2 Artificial Intelligence (AI) Stocks to Buy Now and Seem Ready for a Split

The boom in artificial intelligence (AI) promises wealthy opportunities for forward-thinking investors. Major providers of AI infrastructure and applications could be particularly attractive investments, as they are likely to benefit disproportionately from the growth of the technology industry.

AI pioneers that conduct stock splits could get an additional boost. Stock splits may not change a company’s fundamental value, but investors view them as a vote of management’s confidence in the company’s future. Stocks that split tend to perform well, often reaching new highs.

If you want to buy high-quality AI stocks that could opt for a stock split in the near future, read on.

Possible stock split No. 1: Super Micro Computer

NVIDIA‘S (NASDAQ: NVDA) The latest semiconductor technology has contributed to the explosive spread of AI. The chip manufacturer’s share price has skyrocketed in response. Super-microcomputer (NASDAQ:SMCI) delivers high-performance servers and data storage systems that go hand in hand with Nvidia’s hugely popular AI chips—and its shares have performed even better than the tech giant’s so far this year.

SMCI diagram

SMCI diagram

The company – known as Supermicro – grew rapidly last quarter, with revenue for the period ending March 31 rising 201% year-on-year to $3.9 billion. Earnings per share rose an impressive 329% to $6.56.

Thanks to its close ties to Nvidia and its high pace of innovation, Supermicro’s AI hardware manufacturer is one step ahead of its competitors. Supermicro was quick to market with its liquid-cooled AI SuperClusters for Nvidia’s new Blackwell AI computing platform. The easily scalable data center systems accelerate the training and inference of AI models while reducing energy costs.

“Supermicro has developed cutting-edge accelerated computing and networking solutions from Nvidia that will optimize the trillion-dollar global data centers for the age of artificial intelligence,” said Nvidia CEO Jensen Huang in a press release announcing Supermicro’s new SuperClusters on June 4.

Given its stellar operating performance and tantalizing growth potential, you might think that Supermicro’s shares would be trading near all-time highs. But that’s not the case today. The previously soaring stock price has recently pulled back and is now about 37% below its 52-week high.

And that’s where your opportunity lies. Supermicro’s shares are currently available for less than 23 times expected 2025 earnings. That’s an attractive price for an AI star whose earnings are expected to grow 62% annually over the next five years.

Additionally, with Supermicro’s stock price currently at nearly $800, Supermicro may soon decide to split its shares to make them more affordable for regular investors. This could lead to a stock rally that pushes the stock price back up.

Possible stock split No. 2: Palo Alto Networks

In addition to powerful hardware, cybersecurity is an important component of any effective AI strategy. Palo Alto Networks (NASDAQ: PANW) is a leading provider of critical cloud security services and AI will drive its growth.

AI requires data. Protecting that data is paramount. Failure to do so could result in loss of customer trust, massive fines, and other costly financial penalties.

In turn, global demand for cybersecurity solutions will reach $500 billion by the end of the decade, according to Grand View Research. Consulting giant McKinsey, meanwhile, expects the market for products and services that protect the digital economy to eventually grow to a whopping $2 billion. trillion.

Palo Alto Networks is a leader in this booming industry, offering a wide range of tools, such as next-generation firewalls and advanced threat prevention services, delivered through a single, consolidated platform. This unified approach helps reduce complexity and speed incident response times for customers.

Its size is another strong competitive advantage. With more than 80,000 business customers, the cyber watchdog has more data to analyze. This makes its machine learning technology increasingly intelligent. And as soon as its AI-powered platform detects a new threat, it immediately updates its defenses.

Palo Alto clearly has a promising long-term future. A potential stock split could also give the company a boost in the short term. Like Supermicro, shares are trading at a relatively high price of around $300. The company has already opted for a stock split in 2022 to make it more accessible to potential shareholders. Another stock split today could increase demand for the shares among retail investors, which could help put the stock price on the path to new highs.

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Joe Tenebruso does not own any stocks mentioned. The Motley Fool owns and recommends Nvidia and Palo Alto Networks. The Motley Fool has a disclosure policy.

Stock Split Watch: 2 Artificial Intelligence (AI) Stocks to Buy Now That Look Ready for a Split was originally published by The Motley Fool

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