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Before You Rush to Buy Nvidia, Here Are 3 Artificial Intelligence (AI) Stocks You Can't Afford to Ignore

Before You Rush to Buy Nvidia, Here Are 3 Artificial Intelligence (AI) Stocks You Can't Afford to Ignore

  • 24.03.2025 18:00
  • fool.com
  • Keywords: AI

The article highlights three AI stocks—Micron Technology, Oracle, and Meta Platforms—as undervalued opportunities post-market sell-off, offering growth potential despite Nvidia's decline.

Meta ServicesNVDAsentiment_dissatisfiedMUsentiment_satisfiedORCLsentiment_satisfiedMETAsentiment_satisfied

Estimated market influence

Nvidia

Nvidia

Negativesentiment_dissatisfied
Analyst rating: Strong buy

The sell-off in AI stocks was triggered by Nvidia's underwhelming financial results and geopolitical tensions, leading to a 20% drop in its stock price. However, the article suggests that while Nvidia is affected, there are other companies offering greater opportunities.

Micron Technology

Micron Technology

Positivesentiment_satisfied
Analyst rating: Buy

Micron supplies high-bandwidth memory (HBM) to Nvidia and others, which is crucial for AI advancements. Despite risks like market competition and cyclical nature, Micron's valuation appears attractive with expected growth in demand for memory chips.

Oracle

Oracle

Positivesentiment_satisfied
Analyst rating: Buy

Oracle has positioned itself strongly in cloud computing and database management, essential for AI. Its Database MultiCloud shows strong growth, and it is expanding its cloud infrastructure to meet increasing AI demands.

Meta Platforms

Meta Platforms

Positivesentiment_satisfied
Analyst rating: Strong buy

Meta is a major spender on AI infrastructure, with significant investments in AI driving improvements in ad placement and user engagement. Its generative AI tools are widely used by marketers, indicating strong future growth potential.

Context

Analysis of AI Stocks: Business Insights and Market Implications

Overview

  • Market Context: Artificial intelligence (AI) stocks have experienced a significant sell-off, with many down over 20%. While Nvidia has been impacted, alternative investments in Micron Technology, Oracle, and Meta Platforms present attractive opportunities.

Micron Technology (MU)

Key Facts:

  • Market Cap: $108B
  • Current Price: $96.92
  • Today's Change: 2.32% ($2.20)

Business Insights:

  • Critical Role in AI: Supplies high-bandwidth memory (HBM) to Nvidia, a bottleneck for training large language models (LLMs).
  • Growth Drivers: Memory demand for hyperscale cloud customers and on-device AI.

Market Implications:

  • Risks:
    • High competition in memory chips.
    • Cyclical nature due to vertical integration.
  • Opportunities:
    • Forward P/E of 15, indicating undervaluation.
    • Analysts expect 62.5% EPS growth in fiscal 2026.

Oracle (ORCL)

Key Facts:

  • Market Cap: $434B
  • Current Price: $154.98
  • Today's Change: 1.81% ($2.75)

Business Insights:

  • AI and Cloud Leadership: Dominant in enterprise databases and cloud infrastructure, supporting AI workloads across major cloud platforms.
  • Growth Metrics:
    • Database MultiCloud revenue grew 92% sequentially.
    • Remaining performance obligations reached $130B (+63% YoY).

Market Implications:

  • Strategic Positioning:
    • Strong demand for AI infrastructure.
    • Plans to double data center capacity by 2025.
  • Valuation: Forward P/E of 25, trading at fair value with upside from growing demand.

Meta Platforms (META)

Key Facts:

  • Market Cap: $1.6T
  • Current Price: $619.54
  • Today's Change: 3.91% ($23.29)

Business Insights:

  • AI Investment: Heavy spender on AI infrastructure, with $65B in planned capital expenditures for 2025.
  • Revenue Streams:
    • AI-driven ad optimization and generative AI tools.
    • Over 4 million marketers use Meta's generative AI for campaigns.

Market Implications:

  • Growth Potential:
    • Generative AI could transform messaging app monetization.
    • Stock trades at 23x forward earnings, undervalued despite near-term margin pressure.

Competitive Dynamics and Strategic Considerations

  • Micron: Benefits from Nvidia's reliance on its memory chips but faces substitution risks.
  • Oracle: Leverages its database expertise to compete in the cloud AI space.
  • Meta: Focuses on internal AI development for advertising, with significant spending on infrastructure.

Long-Term Effects and Regulatory Impacts

  • Demand Trends: Sustained growth in memory chips and cloud infrastructure due to AI adoption.
  • Regulatory Risks: Trade policies affecting chipmakers (e.g., tariffs) could impact profitability.

Conclusion

These three companies offer diverse opportunities in the AI ecosystem, from hardware components to software and infrastructure. While risks exist, their undervalued positions and strong growth projections make them compelling alternatives to Nvidia during the market sell-off.