Will the hype over or surrounding artificial intelligence, or AI, ever stop? On June 12, 2024, the market cap of NVIDIA (NASDAQ: NVDA), the acknowledged AI king, rose to above US$3 trillion to join Apple and Microsoft in the exclusive club.
Generative AI was the reason for NVIDIA’s meteoric rise in the stock market. Many investors regret not riding on the start of the wave in January 2024. The AI chip leader completed a 10-to-1 stock split on June 7, 2024. Its share price dropped after, although investors have more shares on hand.
NVDA trades at US$125.20 per share (post-split price), which some analysts say is a “generational buying opportunity.” But is NVIDIA the best AI stock to buy right now?
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Top AI stocks
NVIDIA is up 152.9% year to date, thanks to the momentum from the stock split. However, it isn’t the only company benefitting from AI. Performance-wise, Super Micro Computer is doing much better, except its price is too high now, like NVIDIA’s before the 10-to-1 stock split.
At US$774.74 per share, SMCI’s year-to-date gain is 172.6%, while the overall return in 3 years is 2,013.9% versus NVDA’s 603.6%.
Smart choice
Toronto-based Celestica (TSX: CLS) is cross-listed on the NYSE, so American and Canadian investors can invest in another top-performing AI stock. CLS has rewarded investors with massive gains like NVDA and SMCI. As of this writing, the share price is C$75.33 (US$54.89). The year-to-date gain and overall return in 3 years are 94.1% and 646.6%, respectively.
The C$6.5 billion supply chain solutions provider is a significant player in the AI economy. Celestica AI developed the optical compute and memory fabric solution, Photonic Fabric. The optical interconnect technology platform for compute and memory can supercharge AI infrastructure.
Photonic Fabric is Celestica’s newest growth catalyst. Customers can expect this transformational solution to provide a foundational technology to advance AI while maintaining scalable, sustainable, and profitable business models.
Still, the business thrives because of two core business segments: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). In addition to supply chain solutions, Celestica designs and manufactures hardware platforms for the most innovative companies.
Strong start to 2024
Celestica is a strong buy following its impressive revenue and profit growth in Q1 2024. In the three months ending March 31, 2024, consolidated revenue increased 20.2% to US$2.2 billion versus Q1 2023, while net earnings soared 311.7% year over year to US$101.7 million.
Rob Mionis, President and CEO of Celestica, said, “We continue to see healthy demand across a number of our major customers, which provides us with the confidence to raise our full-year 2024 outlook.” He assures that management will stay focused on solid execution for customers, deliver on its strategic priorities, and achieve financial targets.
Global supply chain constraints are ongoing challenges that can negatively impact the availability of materials and the business. Fortunately, they have been diminishing recently and hardly affected Celestica during the quarter.
Best buy
Celestica ranks among the top AI stocks in 2024. The market-beating returns indicate investors’ acceptance in Canada and the United States. But the best part is that the price is considerably cheap vis-à-vis its growth potential.
