2 Top AI Stocks to Buy Now, According to Wall Street

As organizations ramp up investment in artificial intelligence (AI) technology, there are more chip stocks starting to get in on the action besides AI chip leader Nvidia.

Goldman Sachs lists Advanced Micro Devices (NASDAQ: AMD) and Marvell Technology (NASDAQ: MRVL) as two of its top AI chip stocks to buy right now. These companies are seeing accelerating demand for their AI chips that could fuel new highs over the next few years. Here are more details on what’s fueling interest in these two AI stocks.

1. Advanced Micro Devices

Shares of AMD are up 117% over the last year, despite the company experiencing a 4% decline in total revenue. AMD’s chips are found in several markets, including video game consoles, personal computers, and even the world’s most powerful supercomputers. However, investors are optimistic about the company’s accelerating growth in data centers, where its new MI300X graphics processing units (GPUs) designed for AI are gaining significant traction in the marketplace.

In the fourth quarter, AMD said data center revenue, which comprises less than a third of the business, grew 38% year over year and 43% over the previous quarter. GPU revenue for data centers exceeded management’s expectations following the launch of the MI300 series. AMD is seeing strong interest from several leading cloud providers, including Microsoft, which is using the MI300X to power new capabilities in the Azure enterprise cloud service.

It’s the accelerating demand in the data center business that has Wall Street analysts expecting AMD to return to growth this year.

The stock has already risen 20% year to date, as investors sense there could be a wave of growth on the horizon. While AMD expects the near-term environment to be mixed for its consumer chips, it raised 2024 revenue guidance for data center GPUs significantly. AMD previously expected these products to bring in $2 billion in revenue this year but now expects over $3.5 billion.

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