Why Micron, Oracle, and Palo Alto are the best AI growth stocks – Magic Post

Legacy, product-based software technology is quickly becoming obsolete. Not only is the cloud the dominant force in technology today, but artificial intelligence is also advancing rapidly, changing how software technology is used. Today, we look at three once-powerful legacy software technology companies that have reemerged as powerhouses in the AI ​​space. These companies have adapted to the changes and can now benefit from them in the long term, increasing shareholder value and increasing their value. With the AI ​​boom expected to continue for decades, the opportunity for value gains is significant.

Micron memory is key to AI, NVIDIA GPUs, and data centers

Micron Nasdaq: Mo It is a leading manufacturer of memory chips for legacy technologies and is now a leader in the field of artificial intelligence. AI requires a lot of memory for training and inference, and the solution is HBM. High-bandwidth memory provides the necessary capacity and power, and Micron’s HBM3E technology is the best. The HBM3E architecture delivers industry-leading capacity and power usage, which is critical to AI functionality and cost. The more advanced AI becomes, the more energy it consumes, leading to increased operating costs.

In terms of demand, legacy businesses continue to impact results but are offset by strong growth in the higher-margin data center and AI industries. The company is gaining share in these categories, as it grows its data center business by 40% sequentially in the third quarter, and 400% compared to the previous year, and expects continued strength. The HBM market is expected to sequentially double in size in the fourth quarter and then quadruple in size over the next few years. Systemwide revenue growth estimates point to doubling these revenues over the next two years and maintaining record levels over the subsequent three to five years.

Analysts have revised their target price forecasts at the end of 2024 but still expect strong gains. The range of targets is $98 to $250, with more than 80% of December targets in the $125 to $145 range in parentheses. Consensus is down from its peak but expects a strong 55% upside for the market.

Oracle keeps track of money in the cloud: becoming the database of choice for super-scalers

oracle New York Stock Exchange: Oracle It embarked on a game-changing mission in 2011 when it launched its first cloud products and pivoted into full gear with the advent of Gen 2 Cloud. Today, Oracle’s subscription cloud business has surpassed its legacy product business in terms of its contribution to the network, and its share is growing.

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

Results in 2024 include slower growth, with legacy cloud business offsetting, but also evidence of increasing leverage. The company’s remaining performance obligation, RPO, rose nearly 50% at the end of the third quarter on strength in next-generation technologies. This suggests that revenue growth will accelerate as the year progresses and will remain strong through 2026 or beyond. Analysts rate this stock a Moderate Buy and see it at least 8% ahead from its 2024 closing price. However, the revisions trend is positive, with the consensus up 7% in December and 45% for the year, suggesting much greater gains. 25% is at the upper end of the range.

Palo Alto is changing with the times: AI believes in using AI

Palo Alto Networks NASDAQ:PANW It is a global leader in cybersecurity, with a business supported and driven by secular trends, including artificial intelligence. Not only does AI increase cyber threats and their severity, but it also increases Palo Alto’s ability to detect, prevent, and mitigate these threats.

The critical development for Palo Alto Networks investors is the move to the platform. Standardizing their tool into one easier-to-use format is crucial to retaining existing customers and acquiring new ones. The 2024 results reveal that the plan’s near-term impact on revenue and earnings growth was less than feared, and the potential for gains was greater than expected. Analysts rate this stock a Moderate Buy and see it up 10% according to the reported MarketBeat consensus and another 20% in the upper range.

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