The group of stocks known as the "Magnificent Seven" including Apple, Amazon, Nvidia, Meta Platforms, Microsoft, Alphabet, and Tesla, has been at the forefront of the AI hype and has significantly outperformed the broader market over the last 18 months.
However, the steep rise in their prices may mean they are not the most attractive buys at the moment. Instead, it might be wise to explore other options.
Here are a couple of potential contenders:
1. **Super Micro Computer**: This company's stock has surged by a staggering 850% in the past year, driven by its crucial role in constructing AI data centers. Super Micro Computer specializes in selling turnkey modular server systems, which are particularly appealing to companies looking to avoid the complexities of building their own systems.
This strategy has led to substantial growth, with revenue increasing by 103% year over year and 73% quarter over quarter.
Management is optimistic about future growth, expecting revenue to grow by over 200% year over year in the next quarter. With the world's data center footprint projected to double by 2030 to support AI growth according to Grand View Research, Super Micro Computer appears to be in a strong position to continue its upward trajectory.
2. **Duolingo**: Despite already experiencing significant growth, with its shares rising by an impressive 70% over the past year, Duolingo may still be flying under the radar.
Duolingo offers an educational app that uses gamification to make learning engaging and effective, primarily focusing on languages but also expanding into new content areas like math.
The app's popularity is evident in its growing user base, which has increased by 46% year over year to 88.4 million monthly active users and 65% to 26.9 million daily users.
Duolingo generates revenue through premium subscriptions, testing, and data, with fourth-quarter revenue up by 45% year over year and full-year 2023 revenue reaching $531 million, a 44% increase over the prior year.
The company recently achieved GAAP profitability, indicating the potential for rapid earnings growth ahead.
With over 2 billion people worldwide learning new languages, Duolingo has a significant long-term market opportunity.
The company's success suggests a promising future for both the business and its investors.