For the past 15 months, AI stocks have boomed. And companies related to that trade have soared. While many of these chipmakers are hitting new highs, there’s still room to run.
That’s being seen by continued strong earnings. That indicates customers continue to demand the hardware needed to run today’s data-intensive AI programs. And as long as earnings continue to remain strong, the rally can continue indefinitely.
One sign of continued strength is from memory chipmaker
Micron (MU). Shares soared following a positive earnings surprise. It was even strong enough to drive up the entire sector.
Micron’s earnings show that the trend is still in its early stages, and companies playing the trend have ample time to benefit.
Revenues are now up 16% over the last 12 months. As is the case with many chipmakers, Micron is still unprofitable. However, shares are still inexpensive at 10 times forward earnings.
Action to take: Micron shares have more room to run, even after their earnings jump. Investors should buy a stake now as a momentum play for continued gains in the months ahead. Plus, Micron also pays a 0.5% dividend.
For traders, the June $125 calls, last trading for about $4.00, could see mid-double-digit returns or better in the coming weeks on a further upside in shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.