These Overlooked AI Stocks Could Deliver Explosive Returns Over the Next 5 Years

Key Points

• Micron's high-bandwidth memory has renewed interest in the memory chip stock.

• A lull in Marvell's data center chip business presents a potential opportunity.

• Qualcomm's smartphone chipsets and increased diversification could draw in investors.

• 10 stocks we like better than Micron Technology ›

The rise of artificial intelligence (AI), specifically generative AI, has sparked a boom in tech stocks. In addition to Nvidia and Palantir Technologies, investors seem increasingly wise to the potential of other AI stocks.

Fortunately for new investors, the market seems to have ignored some AI stocks. Still, many of these can likely benefit from the AI boom. Knowing that, investors may want to capitalize on the opportunity in these names.

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Micron

Micron Technology (NASDAQ: MU) specializes in the production of memory chips, a key component of computing. The memory market is among the most cyclical parts of the semiconductor industry, and this has often led to bust cycles so severe that they wiped out entire booms in past cycles.

More recently, this dynamic seems to have changed thanks to Micron's high-bandwidth memory (HBM). It uses vertical 3D stacking to raise data transfer rates and throughput, helping to make some of the more advanced AI applications possible.

This popularity helped Micron's revenue in the third quarter of fiscal 2025 (ended May 31) to grow by 31% to $9.3 billion. That improvement increased operating expenses by a modest amount, resulting in a quarterly net income of $1.9 billion, up from $332 million in the year-ago quarter.

With that improvement, investors have just begun to appreciate Micron stock, as evidenced by the rise in the stock price over the last year. At a P/E ratio of 29 and the stock back in a growth mode, there is likely time for new investors to buy before the market takes greater notice of Micron's performance.

Marvell

Chipmaker Marvell Technology (NASDAQ: MRVL) has long developed chips for the telecom and consumer sectors. However, its move into custom ASICs (application-specific integrated circuits), specifically in the data center side of the business, has led investors to view Marvell in a new light.

The company's cloud solutions, interconnects, and network switches provide the foundational infrastructure needed to offer what Marvell claims is an "unmatched performance" to AI data centers.

The company's financials affirm its value to the AI marketplace. In the second quarter of fiscal 2025 (ended Aug. 2), Marvell's $2 billion in revenue surged 58% compared to year-ago levels. Operating expenses rose by 5% during that time, resulting in a net income of $195 million. In Q2 of fiscal 2024, Marvell lost $193 million.

Admittedly, investors soured on the stock since Marvell forecast flat quarter-over-quarter revenue growth in the third quarter. That helped lead to flat stock price growth over the last year.

Nonetheless, that is likely a cyclical move, as Marvell expects growth to resume in the fourth quarter. Also, considering that the price-to-sales (P/S) ratio of 9 is down from a high of 20 in January, now might be an excellent time to buy Marvell at a discount before its growth resumes.

Qualcomm

Among AI stocks, one of the more surprising laggards may be Qualcomm (NASDAQ: QCOM). Although it remains the leading smartphone chipset company, AI has not inspired the type of upgrade cycle that other technologies have fostered in past years. Moreover, a heavy reliance on China for its revenue may have also concerned investors.

However, consumers will have to upgrade at some point, which should make Qualcomm's AI more widely available and desirable to users. Additionally, it has long prepared for the day when smartphones are less critical, and it has built chips designed for the IoT and automotive fields and has recently ventured into the PC business.

These industries have already helped boost Qualcomm's financials. In the third quarter of its fiscal 2025 (ended June 29), revenue increased by 10% year-over-year to just over $10 billion. Automotive and IoT revenues rose more than 20% during that period, a trend that bodes well for Qualcomm's future. With that, net income surged to almost $2.7 billion, 25% higher than year-ago levels.

So far, that has not helped Qualcomm's stock, which dropped by nearly 5% over the last year. Still, it has made a dramatic recovery since April, and at a P/E ratio of just 16, the stock will likely become more attractive as this growth trend continues.

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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia, Palantir Technologies, and Qualcomm. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.