Wall Street says the two AI stocks that split are up 455% and 1,150% in three years, making now a good time to buy.

Chip maker Nvidia (NVDA -6.39%) is one of the biggest winners from the artificial intelligence (AI) boom: The company’s shares have risen 455% since August 2021, making it the second-best performing stock in the S&P 500 index. (^GSPC -0.00%) The company has conducted a 10-for-1 stock split in June to make its shares more affordable over the past three years.

Server manufacturer: Super Micro Computer (SMCI 1.20%) The company is another beneficiary of the AI ​​boom: Its shares have soared 1,150% since August 2021, making it the best-performing stock in the S&P 500 over the past three years. The company plans to reset its share price in September with a 1-for-10 stock split.

Generally speaking, Wall Street analysts believe both stocks will be profitable investments over the next 12 months. The median price target for Nvidia is $145 per share, which represents a 24% upside from the current price of $117. The median price target for Super Micro is $693 per share, which represents a 56% upside from the current price of $443.

Here’s what investors need to know about these AI stocks.

1. NVIDIA

Nvidia reported phenomenal financial results for the second quarter of fiscal 2025 (ended July 2024): Revenues increased 122% to a record $30 billion, driven by particularly strong growth in the data center segment, gross margins expanded 450 basis points, and non-GAAP earnings increased 152% to $0.68 per diluted share.

“Spectrum-X Ethernet for AI (networking) and Nvidia AI Enterprise software are two new product categories that have achieved significant scale, demonstrating Nvidia’s full-stack, datacenter-scale platform,” CEO Jensen Huang said.

Nvidia is best known for its graphics processing units (GPUs), the industry-standard chips that accelerate complex data center workloads, including training machine learning models and running artificial intelligence (AI) applications. Nvidia regularly breaks performance records in MLPerfs, an objective benchmark that measures the training and inference capabilities of AI systems, and analysts say the company holds more than 80% of the market share for AI chips.

But Nvidia is truly powerful because it offers a full-stack computing platform that spans hardware, software, and services. The company complements its GPUs with high-performance networking equipment and central processing units (CPUs). It also provides software and services that streamline the development of AI applications. “What sets Nvidia apart is its participation in so many parts of the dynamic AI economy,” wrote Jim Kelleher of Argus in a recent note.

Going forward, Wall Street expects NVIDIA’s adjusted earnings to grow 44% annually through fiscal 2026. As such, the current valuation of 53 times adjusted earnings seems reasonable. Investors looking to get started or increase their exposure to NVIDIA should consider buying a few shares today.

2. Supermicrocomputer

Supermicro reported mixed results for its fourth quarter of fiscal 2024 (ended June 30). The good news is that revenue beat expectations, growing 143% to $5.3 billion, driven by record demand for AI infrastructure. The bad news is that gross margins fell 580 basis points to 11.2%, and non-GAAP earnings only increased 78% to $6.25 per share. Analysts had expected non-GAAP earnings to rise 132% to $8.14 per share.

However, management attributes the shortage to costs associated with ramping up direct liquid cooling (DLC) manufacturing capacity. These investments are a temporary headwind but should pay dividends in the future. While Supermicro is already a leader in AI servers, its investment in DLC technology could help the company expand its market share. Because liquid cooling is more efficient than traditional air cooling, and AI servers generate a lot of heat, demand for DLC solutions should increase in tandem with demand for AI servers.

Importantly, as shipments of DLC solutions increase, Super Micro expects gross margins to normalize to 14%-17% by the end of fiscal 2025, meaning profitability should improve in coming quarters. “We are well positioned to become the largest IT infrastructure company,” CEO Charles Liang told analysts. But shareholders were hit with some bad news this week.

Supermicro’s shares fell 20% on Wednesday, August 28, after short-seller Hindenburg Research released a report alleging “accounting red flags, evidence of undisclosed related-party transactions, sanctions and export control violations.” However, JPMorgan Chase’s Samik Chatterjee downplayed the situation in a recent client note: “We view the report as containing few details about the company’s alleged wrongdoing that would alter its medium-term outlook.”

Hindenburg’s short report puts investors in a difficult position. If evidence of wrongdoing comes to light, Supermicro’s stock price could fall further. Alternatively, if no such evidence comes to light, the stock price could recover quickly. Personally, I think investors with a high risk tolerance should consider buying a very small amount of shares today. Wall Street expects Supermicro’s earnings to grow 43% annually through fiscal 2026. At this projection, the current valuation of 20 times earnings looks cheap.