We recently compiled a list of 15 trending AI stocks based on the latest analyst ratings and news, and in this article we'll take a look at how Micron Technology (NASDAQ:MU) stands relative to other trending AI stocks.
The AI industry is experiencing explosive growth, making it a highly attractive sector for potential investors. According to a Bloomberg Intelligence report, the global generative AI market was valued at approximately $40 billion in 2022, just before ChatGPT's launch, but is expected to expand at a compound annual growth rate of more than 40% to reach over $1.3 trillion within the next decade. This growth is due to the rapid adoption of AI technologies in various industries, including healthcare, finance, retail, and manufacturing, which are leveraging AI to increase efficiency, reduce costs, and create new revenue streams. For example, in healthcare, AI-driven diagnostics and personalized medicine are revolutionizing patient care, leading to more accurate and timely treatment. The financial sector is also reaping the benefits of AI through advanced algorithms for fraud detection, risk management, and personalized banking services.
For more on these trends, check out “The 33 Most Important AI Companies to Watch” and “20 Industrial Stocks Already Riding the AI Wave.”
The AI market is expanding not only in applications but also geography. North America is the dominant force in AI development, with companies like Google, Microsoft, and Amazon leading the way. However, the Asia-Pacific region, and especially China, is rapidly catching up, driven by heavy investments and a strong government push for AI adoption. The Chinese government has ambitious AI plans that aim to make China a global leader in AI by 2030, at which point China's AI industry is projected to be worth $150 billion. This geographic diversification is crucial for investors who want to reduce their risk exposure by playing in different markets.
Investors should also consider the significant investments being made in AI startups, a key driver of innovation. According to CB Insights, AI startups will raise more than $66 billion in funding in 2022, a record year despite general economic uncertainty. This trend is expected to continue as more venture capital firms and corporate investors recognize AI's potential to disrupt traditional industries. Additionally, the integration of AI with other emerging technologies, such as the Internet of Things (IoT), 5G, and quantum computing, could create new opportunities and markets, further driving growth.
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Our Methodology
In this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular among hedge funds. Why are we interested in stocks that hedge funds are flooding? The reason is simple: our research shows that you can outperform the market by mimicking the top picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small and large stocks every quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (more details here).
A close-up view of a computer motherboard with integrated semiconductor chips.
Micron Technology (NASDAQ:MU)
Number of hedge fund holders: 120
Micron Technology (NASDAQ:MU) manufactures and sells memory and storage products. Spending on AI data centers has created a big market for one of the company's flagship products, high-bandwidth memory (HBM). Micron has a big lead over its competitors in this regard, as the HBM3e chips it sells are 30% more efficient than others on the market. This figure is important because AI data centers consume a lot of power and the industry is in high demand for efficiency solutions. Micron, which launched these new chips earlier this year, has already sold its production through 2025. This has increased investor interest, driving up prices as demand increases, improving profit margins for chipmakers.
Micron Technology (NASDAQ:MU) has many big-name customers, including AI leaders like Apple and NVIDIA. The latter uses HBM3e chips for its H200 GPUs. These GPUs are likely to sell like hot cakes as production delays have been made on the latest AI chips sold by NVIDIA, Blackwell. Demand is also on the rise for DRAM, another product from Micron that is essential for AI data centers. With companies like NVIDIA now valued at over $3 trillion and analysts predicting it to exceed $10 trillion by 2030 with the potential of AI in mind, smaller players like Micron have plenty of room to grow in the coming years.
Overall, MU ranks #11 on our list of trending AI stocks based on the latest analyst ratings and news. While we acknowledge MU's potential as an investment, we believe some AI stocks have the potential to deliver higher returns in a shorter time frame. If you're looking for AI stocks that are more promising than MU but trade at less than 5x price to earnings, check out our report on the cheapest AI stocks.
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Disclosures: None. This article was originally published on Insider Monkey.
