Two No-Frills Artificial Intelligence (AI) Stocks to Buy Now (Not Nvidia)

The artificial intelligence bull market is here. Stocks are back at all-time highs, thanks in large part to a new boom in artificial intelligence (AI).

The launch of ChatGPT has set off a race to be the leader of the next transformative technology - generative AI - in the eyes of top executives and major investors.NvidiaThe company is by far the biggest winner, selling graphics processing unit (GPU) components that are the backbone of the advanced computing systems needed for artificial intelligence. However, there are a few other stocks that could be winners. Let's take a closer look at two of them.

1. Micron Technology

Micron Technology Inc. firms(NASDAQ resonance code: MU)The company is a leader in the memory chip industry. Historically, the company's business has been highly cyclical, fluctuating from boom to bust, as the semiconductor industry tends to be sensitive to oversupply and changes in demand. Just a year ago, the company suffered a significant operating loss as the outbreak of a pandemic and slowing demand for personal computers and tablets depressed the price of storage chips.

However, Micron is now a beneficiary of the AI boom, as memory chips play a key role in AI servers. As Micron management explained on a recent earnings call, demand for AI servers is driving the growth of high-bandwidth memory, which is straining the supply of DRAM and NAND chips, which Micron specializes in.

As a result of this trend, the company expects DRAM and NAND prices to rise through 2024. Now, the company expects record revenues and "substantially higher" profitability in fiscal 2025.

Sanjay Mehrotra, Chief Executive Officer, also said, "We are in the early stages of a multi-year growth spurt driven by AI, as this disruptive technology will change the face of business and society." Micron's memory and storage components are valuable in the training and reasoning functions of AI algorithms, making Micron a likely winner in the AI space.

If the company can generate record revenues in FY2025, it would surpass its FY2022 revenue of $30.7 billion. At this level, Micron has a price-to-sales ratio of about 4, an attractive valuation compared to other AI stocks.

Micron also has the potential to be highly profitable, as its operating margins hit 50% in 2019. if the company's profitability surges, the stock could move sharply higher from there.

2.Taiwan Semi-Conductor Manufacture

Taiwan Semiconductor Manufacturer firms(Taiwan) Semiconductor Manufacturing (math.) genus(NYSE: TSM)Another tech stock that seems to be ready for the AI wave is TSMC, the world's largest semiconductor foundry. The company, known as TSMC, is the world's largest semiconductor foundry with a name. It is the world's largest semiconductor foundry.AppleNvidia,Broadcom respond in singingAdvanced Micro Devices The company provides manufacturing services to some of the world's largest chip designers.

With a market share of more than 50% in the third-party chip manufacturing industry, TSMC has significant market influence throughout the semiconductor industry, particularly in the area of artificial intelligence chips. TSMC accounts for approximately 90% of the third-party market for advanced chips that AI models rely on.

With a near monopoly in third-party chip manufacturing, TSMC is more resilient than a company like Nvidia, which needs to maintain its competitive edge and pricing power in order for its stock price to continue to rise. The high barriers to entry in chip manufacturing make it unlikely that TSMC's leadership position will be challenged in the coming years.

Like Micron, TSMC is emerging from an earlier downturn in the semiconductor industry, but its growth rate is picking up with the help of artificial intelligence. For the first two months of the year, TSMC's revenue grew by 9.41 TP3T, with revenue growth accelerating to 11.31 TP3T, which investors see as a sign of recovering demand for AI, as it's a marked improvement from the flat revenue growth in the fourth quarter.

TSMC's margins were also high, further demonstrating its competitive advantage and pricing power. In the fourth quarter, its operating margin reached 41.6%.

Finally, TSMC is well-priced with a P/E ratio of 28, and profits are expected to rise with the development of artificial intelligence. The chipmaking giant's business is already rock-solid, but its economic moat looks set to widen in the age of artificial intelligence.

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Jeremy Bowman owns shares of Broadcom. The Motley Fool recommends Advanced Micro Devices, Apple, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

2 Artificial Intelligence (AI) Stocks to Buy Now (Not Nvidia) was originally published by The Motley Fool.