We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
NVIDIA & Micron: 2 Profitable AI Stocks With Strong Growth Potential
Read MoreHide Full Article
Key Takeaways
NVIDIA posted a 63% trailing 12-month net profit margin, highlighting strong profitability.
Micron reported a 55.9% trailing 12-month net profit margin, reflecting solid bottom-line strength.
NVIDIA and Micron passed profitability screens with strong net income ratios and industry-leading growth.
Investors mostly favor companies that generate strong returns after covering both operating and non-operating expenses. As a result, businesses that consistently report profits tend to be more appealing than those that incur losses. To assess a company’s profitability, investors rely on accounting ratios that highlight the most common measures of a company’s bottom-line performance.
On that note, NVIDIA Corporation (NVDA - Free Report) and Micron Technology, Inc. (MU - Free Report) stand out as leading profitable artificial intelligence (AI) stocks, supported by strong net income ratios and promising growth prospects.
Understanding the Net Income Ratio
The net income ratio indicates a company’s profitability. It reflects the percentage of net income relative to total sales revenues. Using the net income ratio, one can determine a firm’s ability to cover operating and non-operating expenses with revenues. A higher net income ratio usually implies a company’s ability to generate sufficient revenues and manage all business functions effectively.
Stock Screening Parameters Using Research Wizard
The net income ratio is not the only indicator of future winners. So, we have added a few more criteria to arrive at a winning strategy.
Zacks Rank less than or equal to #2: Whether the market is good or bad, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Trailing 12-Month Sales and Net Income Growth Higher than X Industry: Stocks that have witnessed higher-than-industry sales and net income growth in the past 12 months are positioned to perform well.
Trailing 12-Month Net Income Ratio Higher than X Industry: A high net income ratio indicates a company’s solid profitability.
Percentage Rating Strong Buy greater than 70: This indicates that 70% of the current broker recommendations for the stock are Strong Buy.
These few parameters have narrowed the universe of more than 7,685 stocks to only 32.
Here are two of the 32 stocks that qualified for the screening:
NVIDIA
NVIDIA is a global computing infrastructure company offering graphics, compute, and networking solutions. The 12-month net profit margin of NVDA is 63%. NVIDIA has a Zacks Rank #2, and its expected earnings growth rate for the current year is 90.6% (read more: Everyone’s Buying NVIDIA, but 2 Smaller AI Stocks Could Soar Higher).
Micron Technology
Micron Technology is a provider of memory and storage products globally. The 12-month net profit margin of MU is 55.9%. Micron has a Zacks Rank #1, and its expected earnings growth rate for the current year is 790.8% (read more: Micron vs. TSMC: Which AI Semiconductor Stock Is a Better Buy Now?).
View the Zacks #1 Rank List
Image: Bigstock
NVIDIA & Micron: 2 Profitable AI Stocks With Strong Growth Potential
Key Takeaways
Investors mostly favor companies that generate strong returns after covering both operating and non-operating expenses. As a result, businesses that consistently report profits tend to be more appealing than those that incur losses. To assess a company’s profitability, investors rely on accounting ratios that highlight the most common measures of a company’s bottom-line performance.
On that note, NVIDIA Corporation (NVDA - Free Report) and Micron Technology, Inc. (MU - Free Report) stand out as leading profitable artificial intelligence (AI) stocks, supported by strong net income ratios and promising growth prospects.
Understanding the Net Income Ratio
The net income ratio indicates a company’s profitability. It reflects the percentage of net income relative to total sales revenues. Using the net income ratio, one can determine a firm’s ability to cover operating and non-operating expenses with revenues. A higher net income ratio usually implies a company’s ability to generate sufficient revenues and manage all business functions effectively.
Stock Screening Parameters Using Research Wizard
The net income ratio is not the only indicator of future winners. So, we have added a few more criteria to arrive at a winning strategy.
Zacks Rank less than or equal to #2: Whether the market is good or bad, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Trailing 12-Month Sales and Net Income Growth Higher than X Industry: Stocks that have witnessed higher-than-industry sales and net income growth in the past 12 months are positioned to perform well.
Trailing 12-Month Net Income Ratio Higher than X Industry: A high net income ratio indicates a company’s solid profitability.
Percentage Rating Strong Buy greater than 70: This indicates that 70% of the current broker recommendations for the stock are Strong Buy.
These few parameters have narrowed the universe of more than 7,685 stocks to only 32.
Here are two of the 32 stocks that qualified for the screening:
NVIDIA
NVIDIA is a global computing infrastructure company offering graphics, compute, and networking solutions. The 12-month net profit margin of NVDA is 63%. NVIDIA has a Zacks Rank #2, and its expected earnings growth rate for the current year is 90.6% (read more: Everyone’s Buying NVIDIA, but 2 Smaller AI Stocks Could Soar Higher).
Micron Technology
Micron Technology is a provider of memory and storage products globally. The 12-month net profit margin of MU is 55.9%. Micron has a Zacks Rank #1, and its expected earnings growth rate for the current year is 790.8% (read more: Micron vs. TSMC: Which AI Semiconductor Stock Is a Better Buy Now?).