The "Great Rotation" Out of Tech Is Fading. Here Are the Best Artificial Intelligence (AI) Growth Stocks Poised to Benefit.
The so-called 'Great Rotation' out of tech and artificial intelligence (AI) stocks appears to have been short-lived. Given that tech and growth stocks have helped power the market higher for much of the past two decades, this probably shouldn't be surprising. While I wouldn't completely write off value stocks, growth is still the place to be, and right now, the biggest growth is coming from AI.
Let's look at three AI stocks to buy right now:
**AMD (Advanced Micro Devices):**
While the first phase of AI was focused on model training, the next phase will emphasize inference and AI agents. AMD is uniquely positioned to benefit from these trends. The company's ROCm software and upcoming MI450 GPU, which packs more memory into its chips, are key advantages. Partnerships with OpenAI and Meta Platforms will drive growth. Additionally, AMD leads in data center CPUs, and as agentic AI rises, the CPU-to-GPU ratio in AI data centers is expected to tighten. AMD is set to deliver new CPUs specifically designed for agentic AI, making it a strong stock pick.
**Broadcom:**
As hyperscalers seek alternatives to Nvidia, Broadcom is increasingly relied upon for custom AI chips. Broadcom is a leader in ASIC technology and has helped develop Alphabet's successful TPUs. With TPU growth booming, Broadcom is benefiting from Alphabet's internal use and growing acceptance by other large customers, including Anthropic, which has ordered $21 billion in chips from Broadcom. Broadcom projects selling $100 billion in AI chips alone by fiscal 2027, about five times its total AI revenue from last year. Additionally, its data center networking business, led by the Tomahawk Ethernet solution, is also seeing robust growth. This makes Broadcom a stock to consider now.
**Micron Technology:**
While Micron Technology might be seen as 'over-earning' in the current memory cycle, it is riding a significant trend that is unlikely to end soon. As one of the major DRAM memory makers, alongside Korean companies Samsung and SK Hynix, Micron benefits from a DRAM shortage driven by AI demand. This shortage is tied to the need for high-bandwidth memory (HBM) in AI chips, which requires more wafer capacity than ordinary DRAM. Long-term HBM deals are being locked up, reducing cyclicality and raising the market floor. With a forward P/E of only 4.5 based on fiscal 2027 estimates, Micron Technology is a compelling buy.
Source: The Motley Fool