Why Micron, Oracle and Palo Alto are the best AI stocks for growth News ad

Legacy product-based software technologies quickly become obsolete. Not only is the cloud a dominant force in technology today, but artificial intelligence is also rapidly evolving, changing the way software technologies are used. Today we look at three once-powerful legacy software companies that are re-emerging as leaders in artificial intelligence. They have adapted to the changes and can now benefit from them in the long term, increasing shareholder value. With the AI ​​boom expected to last for decades, the opportunity for value addition is significant.

Micron memory plays a central role in artificial intelligence, NVIDIA GPUs and data centers

micron NASDAQ: Manchester United is a leading manufacturer of memory chips for legacy technologies and is currently a leader in artificial intelligence. AI requires a lot of memory for training and inference, and the solution is HBM. High bandwidth memory provides the capacity and power you need, and Micron’s HBM3E technology is the best. The HBM3E architecture delivers industry-leading capabilities and power efficiency, which is critical to AI functionality and cost. The more advanced AI becomes, the more energy it consumes, increasing operating costs.

On the demand side, legacy businesses continue to weigh on results, but are offset by robust growth in the high-margin data center and artificial intelligence industries. The company is gaining share in these categories, growing its data center business sequentially by 40% in the third quarter and 400% year-over-year, and expects further growth. The BM market is projected to double sequentially in the fourth quarter and then quadruple over the next few years. Systemwide revenue growth is estimated to double over the next two years and remain at record levels for the next three to five years.

Analysts have softened their price target forecast for the end of 2024, but continue to expect significant growth. Targets range from $98 to $250, with more than 80% of December targets in the $125 to $145 range falling within the consensus range. Consensus is below its peak but forecasts solid market upside of 55%.

Oracle follows the money to the cloud: becomes the database of choice for hyperscalers

Oracle New York Stock Exchange: ORCL embarked on a game-changing mission in 2011 when it released its first cloud products and accelerated with the advent of the second generation cloud. Today, Oracle’s subscription-based cloud business has surpassed its legacy business in terms of network contribution, and its share is growing.

Oracle is not only an up-and-coming hyperscaler building some of the most advanced data centers on the planet, but also a leading provider of AI developer services and AI data management services. It has partnerships with three of the leading hyperscalers including Google, Amazon and Microsoft, embedding its tools into their networks, making it the most accessible and easy-to-use database on the market.

The 2024 results include slower growth as legacy businesses offset cloud technology, as well as evidence of rising leverage. The company’s remaining performance obligation, RPO, increased nearly 50% at the end of the third quarter due to the advancement of next-generation technologies. This suggests earnings growth will accelerate as the year progresses and remain strong through 2026 or beyond. Analysts rate the stock a Moderate Buy and expect it to rise at least 8% from its 2024 closing price. However, the revision trend is positive, with consensus up 7% in December and 45% for the year, pointing to much larger gains of 25% at the top end of the range.

Palo Alto Changes with the Times: Protecting AI with AI

Palo Alto Networks NASDAQ:PANV is the world’s leading cybersecurity company whose business is fueled and driven by secular trends, including artificial intelligence. AI is driving not only the growth of cyber threats and their severity, but also Palo Alto’s ability to detect, prevent and mitigate those threats.

The most important development for Palo Alto Networks investors is the transition to platformization. Consolidating the tool into a single, easier-to-use format is critical to retaining existing customers and attracting new ones. The 2024 results show that the plan’s near-term impact on revenue and earnings growth was less than expected and the upside potential was greater than forecast. Analysts rate the stock a Moderate Buy and expect it to rise 10% in line with the MarketBeat consensus and another 20% at the top end.

Before you consider Micron technology, here’s what you need to hear.

MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and Micron Technology wasn’t on the list.

While Micron Technology currently has a Moderate Buy analyst rating, the top-rated analysts think these five stocks are Strong Buys.

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