These 7 AI stocks will benefit from strong demand - Bank of America

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Analysts at Bank of America highlighted seven artificial intelligence (AI) stocks they see benefitting from strong demand.

The investment bank said Super Micro Computer (NASDAQ:SMCI), Dell Technologies (NYSE:DELL), and Hewlett Packard Enterprise (NYSE:HPE) will directly benefit from higher AI server demand, while NetApp (NASDAQ:NTAP), Pure Storage, Inc. (NYSE:PSTG), Western Digital (NASDAQ:WDC), and Seagate Technology (STX) stand to benefit from increased storage demand driven by increased AI workloads.

AI is expected to drive most of the future growth in server revenues over the next four years, with analysts modeling the overall server market growing revenues in double-digits (about 23% CAGR) between 2023 and 2027. Server units are seen growing at high-single digits (8.6% CAGR) in the same timeframe.

«We expect AI server units to grow at 58% CAGR 2023-27, while non-AI server units grow at mid-single digit CAGR (6.3%),» said analysts. «This leads to total server market unit growth at 8.6% CAGR 2023-27.»

Within AI servers, the firm expects both Training servers and Inference servers to grow revenues by double digits, with Training server revenues growing at about 36% CAGR between 2023 and 2027, while inference server revenues grow faster at about 66% CAGR.

In the fourth quarter of 2023, Dell, Super Micro, HPE, and Lenovo were the top server vendors by revenue. Meanwhile, in terms of market