2 Top Artificial Intelligence (AI) Stocks Ready for a Bull Run

Artificial Intelligence (AI) has emerged as a game-changing technology, driving productivity gains and transforming industries. As AI continues to gain traction, several companies have emerged as winners in this sector, with their stocks seeing significant gains. However, with AI still in its early innings, many of these stocks have additional room to run. Let's explore two AI stocks that could be set for a bull run in the coming years.



1. Nvidia (NVDA)
Nvidia is already one of the biggest beneficiaries of AI, as its graphics processing units (GPUs) have become the backbone of AI infrastructure. Demand for Nvidia's chips is insatiable, as large language models (LLMs) require ever-increasing computing power and thus GPUs to be trained on as they become more advanced. With its CUDA software platform long ago becoming the standard for programming GPUs, Nvidia has a wide moat that allowed it to attain a dominant share of the GPU market. Meanwhile, the company continues to advance its technology, accelerating its design cycle to once a year. This combination of a wide moat and advancing technology should allow Nvidia to keep its huge market share and continue to be one of the biggest AI winners.



Nvidia's recent results highlight the company's strong performance. In the third quarter of 2024, Nvidia's revenue grew 18% year over year to $6.8 billion, while its diluted earnings per share (EPS) surged 161% to $0.47. The company's data center revenue surged 122% year over year to $3.5 billion, driven by strong and growing demand for its AI-centric data center chips. Despite weakness in the gaming market, Nvidia's stock has soared 168% over the past year, indicating the market's confidence in the company's AI-related activities.

2. Broadcom (AVGO)
For investors looking for the next big AI chip winner, Broadcom tops the list of candidates. The company participates in the AI infrastructure buildout through its networking portfolio, which provides switches and network interface cards (NICs), as well as through helping customers build custom AI chips. Broadcom is looking to grow and take share in the AI data center switching market, where its Ethernet switches compete against Nvidia's InfiniBand technology. The company touts that Ethernet technology is superior to InfiniBand in handling AI workloads and transferring data between GPUs. While both technologies have their pros and cons, this is a growing market that is becoming more important as GPU clusters become larger. Thus, there is a lot of potential upside for multiple players to benefit.



Broadcom's biggest opportunity, though, is in helping customers develop chips designed for specific computing and power needs. The company has been adding a number of big customers in this area, and it should be a strong growth driver in the years to come. In its fiscal 2024 fourth quarter (ended Nov. 3), Broadcom generated revenue that jumped 51% to $14 billion, while its adjusted EPS climbed 31% to $1.42. The company is guiding for AI revenue in a range of $60 billion to $90 billion by fiscal 2027, representing growth of between 391% and 638% compared to its 2024 revenue of $12.2 billion.

In conclusion, Nvidia and Broadcom are two AI stocks that could be set for a bull run in the coming years. Both companies have strong fundamentals, with Nvidia's GPU technology and Broadcom's networking portfolio and custom chip development driving their growth. As AI continues to gain traction, these companies are well-positioned to capitalize on the growing demand for AI infrastructure and applications. Investors who are bullish on AI should consider adding these stocks to their portfolios.