Why Micron, Oracle and Palo Alto are the top AI stocks for growth

Legacy, product-based software technology is rapidly becoming obsolete. Not only is cloud technology a dominant force today, but AI is also rapidly advancing how software technology is used. Today, we look at three times-powerful legacy software Technology Companies are re-emerging as AI powerhouses. They have embraced the changes and can now benefit from them in driving long-term, incremental and shareholder value. with the The AI ​​boom Expected to last for decades, the opportunity for value gains is significant.

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

micron NASDAQ: MU A leading memory chipmaker for legacy technologies and now an AI leader. AI requires a lot of memory for training and inference, and the solution is HBM. High bandwidth memory provides the required capacity and power, and Micron’s HBM3E technology is the best. The HBM3E architecture provides industry-leading capacity and power utilization, critical to AI function and cost. The more advanced the AI ​​becomes, the more power it consumes, increasing operating costs.

Regarding demand, the legacy business continues to weigh on results but is offset by strong growth in high-margins. Data center and AI industry. The company is taking share in those categories, growing its data center business 40% sequentially in Q3, 400% year-over-year, and expects the strength to continue. The HBM market is forecast to double sequentially in Q4 and then quadruple in size over the next few years. Systemwide revenue growth is projected to double within the next two years and maintain record levels for the next three to five years.

Analysts conducted Price target view End 2024 but continue to expect a strong gain. The range of targets runs from $98 to $250, bracketing the more than 80% consensus of December targets in the $125 to $145 range. Consensus is below its peak but predicts a solid 55% upside for the market.

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

the oracle NYSE: ORCL Embarked on a game-changing mission in 2011 when it launched its first cloud products and shifted into overdrive with the advent of its Gen 2 cloud. Today, Oracle’s subscription-based cloud business has overtaken its legacy product business in terms of its contribution to the Net, and its share is growing.

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

Results in 2024 Slowing growth with legacy business offsetting cloud, but also evidence of mounting leverage. The company’s residual performance obligation, RPO, was up nearly 50% at the end of CQ3 due to a strong focus on next-generation technologies. This suggests that revenue growth will accelerate as the year progresses and remain strong until 2026 or later. Analysts rate this stock as a moderate buy and see it moving at least 8% from the closing price in 2024. However, the revision trend is positive, with consensus up 7% in December and 45% for the year, pointing to a huge 25% gain at the high end of the range.

Palo Alto changes with the times: using AI saves AI

Palo Alto Networks NASDAQ: PANW The world’s leading cyber security company, whose businesses are supported and driven by secular trends including AI. Not only is AI growing Cyber ​​threats and their severity, but also Palo Alto’s ability to detect, prevent and mitigate those threats.

An important development for Palo Alto Networks investors is the move toward platformization. Integrating its tools into a single, easy-to-use format is critical to retaining existing customers and acquiring new ones. The 2024 results show that the plan’s near-term impact on revenue and earnings growth was less than feared, and that the benefit potential was greater than anticipated. Analysts rate the stock a moderate buy and see it rising 10% on MarketBeat’s reported consensus and another 20% on the high-end range.

Before considering Micron technology, you may want to hear this.

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