2 Artificial Intelligence Stocks to Double Up on Right Now

In the past couple of years, artificial intelligence (AI) has been one of the most important investment themes on Wall Street. While the initial AI-fueled frenzy mostly died down, institutional and retail investors are still in search of AI-powered investments, especially those with long-term and sustainable growth prospects.

Stocks like Micron Technology (NASDAQ: MU) and Oracle (NYSE: ORCL) seem to fit the bill. Here's why investors can benefit by doubling up these stocks now.

Micron looks to be a leader in high-bandwidth memory chips

Leading memory player Micron Technology made a splash on Wall Street lately, with its fourth-quarter fiscal 2024 (ended Aug. 29, 2024) revenue and earnings beating consensus estimates. The company emerged as a major beneficiary of the AI wave, driven by the increasing demand for high-bandwidth memory (HBM) chips from data centers and enterprises. Micron's HBM3E technology consumes almost 20% less power than the memory products from the nearest competitor. The higher energy efficiency, a must-have for power-hungry data center operations, has been a major factor in driving the adoption of Micron's memory products.

Furthermore, thanks to its multiyear engagements with customers on HBM research and development, the company is confident of maintaining its leadership position with the next-generation HBM technologies such as HBM4 and HBM4E.

Micron recorded several hundred million dollars in revenue from HBM sales in the fourth quarter of fiscal 2024. The HBM business reported higher gross margins than its DRAM business in the third and fourth quarters of fiscal 2024. Micron expects HBM to be a multibillion-dollar business in fiscal 2025.

Since the company's long-term HBM agreements with clients include pricing for calendar years 2024 and 2025, Micron enjoys significant visibility and predictability for its HBM business. The company also enjoys significant pricing power due to ongoing supply constraints for HBM products. Finally, the shift in revenue mix toward higher-value and higher-margin HBM business will also help boost the company's profitability in the long run.

Micron is also seeing robust demand for other high-value DRAM products such as high-capacity Dual In-line Memory Modules (DIMMs) and Low Power DRAM from traditional and AI servers at data centers. The company also expects to benefit from the increasing demand for advanced memory products from AI PCs and smartphones in the second half of fiscal 2025.

Despite the many pros, Micron is trading at 4.5 times trailing 12-month sales, which is quite low for a company riding the AI wave.