Nvidia, Super Micro Computer, and Microsoft remain top AI stocks to consider for investment. In recent years, many investors have shown great interest in AI stocks, particularly those associated with the growth of generative AI platforms such as OpenAI's ChatGPT. This bullish trend has led to the rise of various tech stocks, even in the face of challenges such as inflation, high interest rates, and other macroeconomic headwinds that have affected less resilient sectors. As we reach the midpoint of 2024, some investors may wonder whether the AI rally will lose momentum. While it is prudent to exercise selectivity when considering AI stocks, there are three prominent options that still hold value and warrant consideration: Nvidia (NVDA -0. 36%), Super Micro Computer (SMCI -7. 98%), and Microsoft (MSFT -1. 30%). 1. Nvidia Nvidia stands as the world's largest manufacturer of discrete graphics processing units (GPUs). Originally focused on the PC gaming market, the company's revenue has experienced significant growth in the past two years due to the booming demand for its data center GPUs. These high-end GPUs are widely utilized for accelerating machine learning and AI tasks, and are currently employed by leading generative AI companies such as OpenAI, Microsoft, and Google (owned by Alphabet). According to JPR, Nvidia now dominates 88% of the discrete GPU market. Furthermore, the demand for its chips continues to surpass its supply. Consequently, analysts anticipate a 98% revenue growth and a 109% growth in adjusted earnings in fiscal 2025 (ending January 2025). With a forward earnings ratio of less than 50, Nvidia's stock appears reasonably valued, demonstrating potential for further growth as the AI market expands. 2. Super Micro Computer Super Micro Computer, also known as Supermicro, has carved out a niche for itself by manufacturing high-performance, liquid-cooled servers suited for demanding tasks.

Hence, it was natural for Nvidia to establish a partnership with the company a few years ago, granting it early access to high-end data center GPUs ahead of many larger competitors. Thanks to support from Nvidia, Supermicro holds a 10% market share in the dedicated AI server segment. Bank of America expects this share to increase to 17% within the next three years, driven by projected 150% market expansion. Approximately half of Supermicro's revenue already comes from AI servers, and this proportion is expected to rise further as the company gains ground against larger server manufacturers and diversifies its business with new AI servers powered by Advanced Micro Devices' more cost-effective chips. Analysts predict growth rates of 110% and 102% in revenue and earnings, respectively, for Supermicro in 2024. These outstanding figures make it an attractive investment opportunity, particularly given its current forward earnings ratio of 23. 3. Microsoft In the past decade, Microsoft has reemerged as a growth stock through the expansion of its cloud-based services and Azure platform. Azure has become the second-largest cloud infrastructure platform globally, following Amazon Web Services (AWS). Additionally, Microsoft has made significant investments in OpenAI, a move that facilitated the integration of OpenAI's generative AI tools into Azure, Bing search engine, and other cloud-based services. This expansion of the AI ecosystem has driven Azure's growth and fortified Microsoft's position against Google in search and advertising domains. Furthermore, Microsoft's acquisition of Activision Blizzard last year bolstered its Xbox gaming business and reinforced its presence in the subscription-based Game Pass and Cloud Gaming ecosystems. Microsoft's diversification across cloud, AI, and gaming markets positions it as an attractive opportunity for balanced growth. Analysts project 14% revenue growth and 13% growth in adjusted earnings for fiscal 2025 (ending June 2025). Despite its forward earnings ratio of 34, Microsoft's strong market positions validate its relatively higher valuation.