Growth stocks in the artificial intelligence (AI) and data center sectors took a hit this week, but there are two AI-focused stocks that are now more affordable and worth considering.
Super Micro Computer (NASDAQ: SMCI) is a major player in the AI industry, experiencing a significant increase in demand for high-performance computing infrastructure. The company designs and manufactures servers and storage systems used in data centers, cloud computing, and AI applications. Super Micro has seen a 1,000% increase in its stock price in the past 18 months and recently joined the S&P 500 index.
The company has a strong partnership with Nvidia, a leading AI company, which has helped drive its success. Despite a recent pullback in its stock price, Super Micro is trading at a discount compared to its average price target. With a forward P/E ratio of 32.4 times and a PEG ratio of 0.69, the stock appears undervalued, although there is some risk involved in meeting future forecasts.
Sterling Infrastructure (NASDAQ: STRL) is a small-cap stock benefiting from the growth in AI and data centers. With a focus on digital infrastructure, including data processing and storage, the company has seen a 125.5% increase in its stock price over the past year. While the stock has pulled back from its recent highs, it still presents a good opportunity for investors.
Sterling Infrastructure has a significant backlog of construction projects, with data centers accounting for 40% of its backlog as of March. The company’s stock is currently trading below its price target and has a P/E ratio of around 21 times, making it an attractive option for investors looking for growth prospects.
Overall, both Super Micro and Sterling Infrastructure offer potential for growth in the AI and data center sectors, although there are risks involved in meeting future forecasts. Despite these risks, both companies have strong foundations and visibility on future earnings, making them compelling options for investors looking to capitalize on the AI boom.