But not every AI stock’s making headlines and seeing huge amounts of hype. Here’s a look at three lesser-known shares that are quietly making investors a fortune.

A vital data player

First up, we have Snowflake (NYSE: SNOW). It offers solutions that enable businesses to get their data structured properly for AI use.

Late last year, I named this as my top US growth stock for 2026. That call was pretty good – it’s up about 75% year to date. I still believe it’s worth considering however. Recently, a company insider said he’s expecting revenue to more than double in the next few years.

If the company can achieve that kind of growth, I’d expect the share price to be materially higher in a few years’ time.

A risk here is competition from rival Databricks. Not only could this company capture market share but if it does an IPO, it could steal investor capital.

I’m optimistic about the long-term outlook though. For my portfolio, this is now a core AI holding.

Specialised chip-making equipment

Next, we have Lam Research (NASDAQ: LRCX). It makes highly specialised machinery that’s critical for manufacturing the advanced chips that are used in AI.

It recently provided guidance that was above Wall Street’s estimates as chipmakers (like Taiwan Semi and Intel) ordered more of its equipment. So it clearly has momentum right now.

Now, this stock’s up about 120% this year (and more than 60% in three months). After that kind of run, I wouldn’t chase it as the valuation’s risen considerably.

If it was to drop back 10%-20% though (which it probably will do at some point), I think it could be worth considering. China remains a risk as the company generates a large chunk of revenues there, but the long-term growth story associated with semiconductor production looks compelling, in my view.

Top-notch cybersecurity

Finally, we have Zscaler (NASDAQ: ZS). It’s a fast-growing cybersecurity company that is helping companies manage AI-related threats

This stock is up about 80% this year. Yet despite these impressive gains, no one is really talking about it.

From an investment perspective, Zscaler’s higher up on the risk spectrum. Not only does it face intense competition from larger players like CrowdStrike and Palo Alto Networks but it’s only just turning profitable now.

Taking a long-term view though, I see a ton of potential. Because AI’s going to dramatically increase the threat landscape for businesses.

“We are rapidly expanding our AI security portfolio to address the emerging risks of AI models and applications.”
Zscaler CEO Jay Chaudhry

It’s worth noting that the company recently forecast annual revenue above Wall Street estimates. It seems a rise in cybercrime, and the rapid adoption of generative AI, have prompted companies to increase investments in cybersecurity to safeguard their digital infrastructure and data.

Given this momentum, I believe the stock’s worth considering today.

The post 3 AI growth stocks that are quietly making investors a fortune appeared first on The Motley Fool UK.

There’s a clear winner, however, this year. And that’s the Blue Whale Growth fund.

Brilliant returns

Launched just over eight years ago, Blue Whale is managed by Stephen Yiu, who is based in London. His focus is on high-quality growth stocks with strong financials and durable competitive advantages.

A concentrated fund, it only ever holds around 25 to 30 stocks. This allows Yiu and his team to focus on their best ideas.

Now, I’ve been invested in this fund since 2019 and while it has been volatile at times, it has done really well for me over the long run. Over the last year, it has returned about 30%, while over the last three, it has returned about 90% (according to Hargreaves Lansdown).

This year, it has experienced some volatility, but still managed to deliver great returns. Over the last six months, it has returned about 24%, which is impressive given that it experienced a near-20% pullback in late March and April.

Note that FTSE 100 and S&P 500 index funds have only returned about 9% and 12%, respectively, over that period. So, Blue Whale is really smashing index funds right now.

AI exposure

What has Yiu done right? Well, for a start he’s had significant exposure to the global artificial intelligence (AI) build out – one of the most powerful themes on the planet today.

Here, he has names like Nvidia, Broadcom, Lam Research (NASDAQ: LRCX), Taiwan Semi, and Oracle in the portfolio. All of these stocks have done really well recently as spending on AI has remained strong.

One name in particular worth highlighting is Lam Research, which makes sophisticated chip-making equipment needed to develop advanced AI processors. It has been a top-10 holding for the fund for a while now and this will have paid off.

Recently, the company provided strong earnings and guidance on the back of the global AI build-out. And since then, many analysts have raised their price targets for the stock.

Now, I’m not saying that this stock is not expensive today – it has shot up recently (it’s up 22% in a month) and now looks a little expensive. But it’s a good example of how Yiu isn’t afraid to back stocks that aren’t widely owned.

Note that he may not hold this AI stock forever. He is quite valuation focused so he could decide to take profits after its recent pop (which has pushed its price-to-earnings (P/E) ratio up to around 27).

A winning strategy

Aside from the focus on AI, Yiu has benefitted from taking large positions in his best ideas, focusing on valuation, and looking for quality. This strategy – which has a resulted in a fund that looks very different to your average index – has really worked.

Looking ahead, I plan to stay invested in this fund. While it has its risks due to its concentrated nature, I think it complements index funds really well and is worth considering as a growth investment.

The post Up 24% in 6 months, this is the best-performing fund in my SIPP in 2025 appeared first on The Motley Fool UK.

There are still a lot of AI stocks that look cheap, however. Here are three that I believe are worth a closer look today.

A suite of AI products

Let’s start with tech powerhouse and Google owner, Alphabet (NASDAQ: GOOG). It currently trades on a forward-looking price-to-earnings (P/E) ratio of just 21.

That’s roughly in the line with the US market average. So, unlike a lot of other AI stocks, Alphabet isn’t commanding a huge valuation premium to the market at present.

Now, one reason this stock has a lower valuation than some others is that generative AI poses a threat to Google’s business model (search). No doubt, there’s some uncertainty here.

Yet with its suite of powerful products (AI mode, AI Overviews, Gemini, Google Maps, etc), I’m optimistic that Google will remain relevant in the AI era. And it seems the market is starting to take the same view.

After some weakness early in the year, the stock is now rising again. I see the potential for further gains ahead and believe the stock is worth considering today.

Rolling out AI agents

Next, we have AI agent specialist Salesforce (NYSE: CRM). It’s currently trading on a P/E ratio of 22.7.

This is very much a ‘battleground’ stock right now. On one hand, the bears say that automation and AI are going to reduce demand for Salesforce’s traditional customer relationship management (CRM) software. On the other hand, there are those who see a lot of potential in the company’s agentic AI offering, Agentforce, and believe the stock is cheap today.

Personally, I’m in the latter camp. While I acknowledge the risks here, I don’t think Salesforce’s offering is going to become obsolete any time soon. And with the company rolling out innovative AI and data services, I think it will continue to grow in the years ahead. So, in my view, it’s a stock to think about buying today.

A crucial cog in the ecosystem

Finally, I think semiconductor manufacturing equipment maker Lam Research (NASDAQ: LRCX) is worth a look today. It currently trades on a P/E ratio of 22.4.

This company plays a really important role in the AI ecosystem. Because it manufactures chip-making equipment needed to develop advanced AI processors (designed by the likes of Nvidia and AMD and built by the likes of Taiwan Semi and Samsung).

This industry importance was reflected in the company’s results for Q2. For the period, revenue and earnings were up 10% and 27% year on year respectively.

Looking ahead, a risk here is China restrictions. Because this country represented 35% of revenue last quarter.

Interestingly though, the US only represented 6% of revenue. If the US ramps up its chip manufacturing capabilities in the years ahead as it plans to, I think revenues here could grow substantially.

Note that since the Q2 results, many brokerage firms have increased their price targets for this stock. Analysts at Susquehanna went to $135, which is 35% above the current share price.

The post 3 top AI growth stocks that still look cheap appeared first on The Motley Fool UK.

I see Nvidia as a great AI stock. However, it’s not the only way to play the theme. With that in mind, here are three others for the AI boom.

AMD

First up, we have Advanced Micro Devices (NASDAQ: AMD) or ‘AMD’ for short. It’s another leading designer of high-performance computer chips.

AMD is very active in the AI space. But it doesn’t have the market position that Nvidia has.

Its market share could potentially rise in the future though.

Right now, AMD is ramping up production of its flagship MI300 artificial intelligence chips. These are are designed to compete against Nvidia’s H100 AI chips and could be launched by the end of the year.

If the company can get this product to the market in the near future, demand could be very high as right now Nvidia’s chips are in short supply.

AMD stock is a little cheaper than Nvidia from a valuation perspective. This is a plus.

However, it’s still quite expensive (the forward P/E ratio is about 39 versus 42 for Nvidia). If growth slows, the stock could take a hit.

Lam Research

Next, we have Lam Research (NASDAQ: LRCX). It’s a leading provider of semiconductor manufacturing equipment.

This company strikes me as a great ‘picks and shovels’ play on the artificial intelligence boom.

AI is going to require a lot of chips to be successful (it’s rumoured that ChatGPT-5 is going to require about 50,000 Nvidia H100 chips). So, demand for chip manufacturing equipment should be high in the years ahead.

Lam looks well placed to benefit here. It specialises in equipment that helps chip manufacturing plants (fabs) print layers of transistors in advanced chips. And it’s one of the biggest players in this space.

Lam shares currently trade on a P/E ratio of about 24. So, they are a bit less risky than Nvidia, to my mind. They can still be volatile though as the semiconductor industry is cyclical.

I’m confident in the long-term story, however.

It’s worth noting that Lam recently raised its quarterly guidance thanks to AI-related demand so it’s already benefiting from the technology.

Arista Networks

Finally, we have Arista Networks (NYSE: ANET).

It specialises in lightning-fast ethernet switches and routers for data centres. It also offers software that controls the hardware and keeps customers locked in.

I see this company – which serves the likes Microsoft, Alphabet, and Amazon – as a good play on AI due to the fact that its technology helps organisations move vast quantities of data over the Internet at incredible speeds.

With its products, tech companies can build high-performance AI networks in a simple and scalable manner.

This stock has done well this year thanks to AI, rising about 60%. After that kind of jump, and with the stock now trading on a P/E ratio of around 32, a pullback could be on the cards.

Taking a long-term view, however, I think it has huge potential. I’m keen to add it to my portfolio.

The post Nvidia stock isn’t the only way for UK investors to capitalise on the AI boom appeared first on The Motley Fool UK.

Tech powerhouse

Let’s start with Microsoft (NASDAQ: MSFT), which was down 5.5% yesterday. It’s one of the world’s largest technology companies.

Microsoft is one of the first shares I’d buy if I was building a portfolio from scratch today. That’s because it offers both growth and defence.

On the growth side, the company has exposure to several high-growth industries including cloud computing, the metaverse, and video gaming. So, it’s well placed to increase its revenues and profits in the years ahead.

On the defensive side, many of its products are essential for businesses today. So revenues should hold up if economic conditions deteriorate.

Of course, there are risks to consider. If tech stocks continue to fall, returns could be disappointing.

However, with the stock now trading on a P/E ratio of 25, I like the long-term risk/reward skew here.

Brand power

Next up, athletic footwear and apparel giant Nike (NYSE: NKE), which declined 5.9% yesterday.

Nike has experienced some supply chain and cost challenges recently. And these issues may persist in the short term. However, given that the stock has fallen from around $180 in November to $106 today, I think a lot of the risk is now largely factored into the share price.

When these short-term challenges do subside, Nike should be well placed to grow its sales and profits. Not only is it likely to benefit from its shift to selling direct-to-consumer, but it’s also likely to benefit from the ‘casualisation’ fashion trend, which is showing no signs of slowing down.

Nike shares currently sport a forward-looking P/E ratio of about 28. That does look high at face value. However, given the company’s incredible brand power, I’m comfortable with the higher valuation.

Growth potential

Finally, I’d also buy shares in Lam Research (NASDAQ: LRCX), which fell 5.6% yesterday. It makes semiconductor manufacturing equipment.

This is a stock I’m quite excited about. In the years ahead, many countries are planning to build semiconductor manufacturing plants on home soil in an effort to avoid chip shortages. The US is one such country that’s set to increase domestic manufacturing significantly. Recently, it announced $53bn in government funding to get the ball rolling.

This ‘reshoring’ of semiconductor manufacturing should provide a huge boost for Lam as its technology is crucial for chip manufacturers. So, the future here looks very bright, to my mind.

It’s worth pointing out that the semiconductor sector, as a whole, is experiencing weakness now. This could persist for a few more quarters and potentially have a negative impact on this stock.

However, in the long run, I expect Lam Research to do well. With the stock trading at just 11 times this year’s forecast earnings, I see it as a bargain.

The post US stocks just tanked. Here are 3 shares to buy appeared first on The Motley Fool UK.

I already have a small holding in Lam as I’m quite bullish on the long-term growth story. Is now a good time to buy more stock for my portfolio? Let’s discuss.

At the heart of a powerful megatrend

While investors seem to have lost interest in technology shares this year, the long-term growth story here is still very much intact, to my mind.

Semiconductors, or ‘chips’, are a very important part of the global economy. Today, they power almost all electronic devices including smartphones, computers, kitchen appliances, and electric vehicles. As the world becomes even more digitalised in the years ahead, demand for chips should rise.

But here’s the real kicker. Over the next decade, we’re likely to see countries all over the world build semiconductor plants domestically in an effort to minimise supply chain disruption (around 90% of advanced semiconductors are manufactured in Taiwan today).

This kind of activity should provide a huge boost for Lam Research as its innovative wafer fabrication equipment plays a crucial role in the chip manufacturing process. In fact, Lam says that today, nearly every advanced chip is built with its technology. So the future looks very exciting, to my mind.

I’ll point out that Wall Street analysts expect revenue growth of 15% for the year ending 27 June and 16% for the following year.

Bargain valuation

After the recent share price fall, the stock now looks cheap. With analysts forecasting earnings per share of $38 for the year ending 27 June 2023, the P/E ratio here is just 12.5. That’s an attractive valuation, in my view.

One person who clearly sees some value at current levels is board member Catherine Lego. Recently, she spent about $800,000 on Lam Research stock. It’s worth noting that Lego – who joined the board in 2006 – has considerable experience in the semiconductor investing space. Previously, she was a general partner at Oak Investment Partners, focused on the semiconductor industry. I see her $800k buy as very encouraging.

Additionally, the company recently authorised a $5bn share repurchase. This suggests management thinks the stock is cheap too.

Risks

Now I need to point out that, like many other companies, Lam is experiencing some supply chain and cost challenges right now. These issues are impacting profitability.

For the quarter ended 27 March, operating income as a percentage of revenue was 29.4%. In Q1 2021, it was 31.6%. The company described the supply environment as “extraordinarily difficult”.

These challenges could persist for a while so this is a risk to be aware of.

However, the good news is that management was confident in the long-term growth story: “We remain confident in the secular drivers of wafer fabrication equipment investment as well as Lam’s leadership position and expect to return to solid growth as industry constraints ease,” said president and CEO Tim Archer.

Lam Research: my view now

In light of all of the above, I’d be happy to buy more Lam Research shares today. In my view, Lam is a high-quality company with a very bright future.

I think the recent weakness has provided me with a great buying opportunity.

The post Should I buy Lam Research shares today? appeared first on The Motley Fool UK.