2 Monster Semiconductor Stocks to Buy Now

The growing $250 billion data center market is extending the growth curve for leading semiconductor companies. Building artificial intelligence (AI) infrastructure will require major upgrades to processors and data storage components to build a new generation of AI-optimized data centers.

Here are two top chip stocks experiencing strong growth that can help you take advantage of this lucrative opportunity.

1. Nvidia

The data center chip market is booming. The largest data center operators, or hyperscalers, are in a long-term process of upgrading semiconductors and components for AI, which require extremely powerful graphics processing units (GPUs) and Nvidia (NVDA 1.51%) is the main supplier.

Nvidia’s revenue doubled year over year last quarter to $30 billion. The high margins these advanced chips command are also causing a huge bump on Nvidia’s bottom line, with earnings per share up 168% from the year-ago quarter.

Nvidia’s growth rate will slow from these robust levels, but the outlook for GPU spending suggests it will grow at double-digit rates for several years. Dell’Oro Group estimates that the market for GPUs and other AI accelerators will grow at an annual rate of 38% over the next five years.

Comments from leading hyperscalers suggest that these estimates are on the money. Meta platforms is investing billions in AI infrastructure, including Nvidia GPUs, for its data centers. “Our continued investment in core AI capability is informed by the strong returns we’ve seen and expect to deliver in the future as we advance the relevance of content and recommended ads on our platform,” said the CFO Susan Li on Meta’s Q2 earnings call.

AlphabetGoogle is another hyperscaler investing a fortune in AI technology. AI is central to the Google Cloud service, search algorithms and recommendations on YouTube. Google believes that the risk of underinvesting in AI infrastructure is far greater than the risk of overinvesting.

For these reasons, Wall Street analysts expect Nvidia’s earnings to grow at high rates over the next few years. There will inevitably be ups and downs, as Nvidia’s stock history shows, but the upside down the road is too great to pass up.

2. Micron technology

Micron technologyhis (MU 0.70%) Memory and storage products will also benefit from data center growth. GPUs are the building blocks, but those high-powered processors are useless if data centers don’t have the capacity to store and retrieve data to train AI models.

Micron is one of the leading suppliers of high-bandwidth memory modules and solid-state storage drives. The company’s revenue can fluctuate due to memory price swings, but it’s currently benefiting from increased data center investment, as revenue rose 81% year-over-year in the most recent quarter.

Looking ahead, Micron sees more favorable revenue trends as demand for AI-enabled PCs and smartphones will come in and benefit its business. Management’s outlook calls for record revenue in fiscal 2025 (which ends in August 2025).

The stock hit a high of $157 this year before falling to its current share price of around $96. Wall Street is concerned that Micron and its competitors may overinvest in memory supply to meet demand, which could put pressure on sales prices and earnings.

However, Micron’s annual revenue has been rising for years. Training AI models will require increasing amounts of data. This will continue to drive higher demand for memory storage and bandwidth, which will ultimately benefit Micron. An investment in Micron is basically a bet on the long-term growth of data consumption in the economy.

The best time to buy Micron stock is down. Analysts expect earnings per share to reach $12.40 in fiscal 2026, which would be a new record for the company. Investors should expect the stock to return to previous highs, implying a gain of 50% or more, over the next few years.