If you’re searching for growth stocks to buy on the dip, look no further. While it never really faded, the artificial intelligence (AI) trade looks to be booming once again. After a soft start to the year, the stocks of companies associated with AI have been surging in recent days as evidence points to growing demand for AI products and the technologies that power them. Microchip and semiconductor stocks in particular are soaring right now. Excitement is also building around the monetization of AI products and what that could mean for the financial results of tech concerns moving forward.
Companies ranging from Microsoft (NASDAQ:MSFT) to Amazon (NASDAQ:AMZN) are expected to get a big financial boost this year as they find ways to earn billions of dollars in new revenue from AI. The AI rally has tech stocks outperforming the overall market, which continues to move in fits and starts to begin 2024. While some analysts are urging caution, the bull run in AI-related stocks shows no signs of slowing down in the near-term. Here are three growth stocks to buy on the dip in this volatile market.
Growth Stocks to Buy on the Dip: Super Micro Computer (SMCI)
It’s best to pay attention to what is happening with Super Micro Computer (NASDAQ:SMCI). As I type, SMCI stock is up 33% in a single trading day and at a new all-time high after the company issued preliminary earnings that were better-than-expected. Super Micro Computer’s stock is now up 484% over the last 12 months, and up 2,667% through five years. This is absolutely a growth stock to buy on the dip, though when a pullback might occur is anyone’s guess.
The latest surge in SMCI stock comes after the the maker of data center hardware components issued preliminary fourth-quarter financial results that showed its revenue will likely come in at $3.60 billion to $3.65 billion, well above previous guidance of $2.70 billion to $2.90 billion. Earnings will be between $5.40 and $5.55 a share, higher than $4.40 to $4.48 forecast previously. Super Micro Computer’s stock has been red hot ever since the company struck a partnership with chipmaker Nvidia (NASDAQ:NVDA).
Advanced Micro Devices (AMD)
While it isn’t surging upwards to the same degree as Super Micro Computer, the stock of chipmaker Advanced Micro Devices (NASDAQ:AMD) is also breaking out and rising rapidly, making it a top growth stock to own. So far in January, AMD stock has gained an impressive 22%, bringing its increase over the past 12 months to 150%. Through five years, AMD stock is up 670% and running circles around the broader market. AMD stock is rising currently because of excitement related to its latest AI microchips.
Right before Christmas, AMD unveiled a new series of microchips called the “Ryzen 8040” that are capable of boosting AI applications and models by as much as 60%. The new chips will be incorporated into laptops and personal computers starting in the current first quarter of 2024. Analysts and investors are also excited about AMD’s new MI300X accelerator microchip that is used in data centers and servers and competes head-to-head with rival Nvidia’s data center chips.
IAMD executives have said that they expect data center microchips to generate $2 billion in revenue for the company this year.
Meta Platforms (META)
Also a major growth stock is Meta Platforms (NASDAQ:META). Its share price is up 11% in the first few weeks of 2024, and up 180% in the past year. Like the other names on this list, META stock is being driven higher by excitement surrounding AI. The company led by CEO Mark Zuckerberg is going all in on AI products, and is one of the first companies to begin monetizing the cutting edge technology through its augmented reality headsets and social media platforms.
In a recent post on Instagram, Zuckerberg said that Meta plans to spend billions of dollars this year buying microchips from Nvidia to power its many AI plays. Specifically, Zuckerberg said the company will have 350,000 Nvidia H100 graphics processing units (GPUs) and about 600,000 H100 compute equivalent GPUs by the end of 2024. With Nvidia’s H100 chips selling for an average price of $25,000 each, Meta Platforms could spend as much as $9 billion to acquire 350,000 of them.
On the date of publication, Joel Baglole held long positions in MSFT and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
