October was a rough month for many stocks. Some of the biggest names in artificial intelligence (AI) sold off. Big names in the industry, like Micron (NASDAQ: MU), sold off around 20%. Furthermore, stalwarts like Nvidia (NASDAQ: NVDA) declined more than 10% while Broadcom (NASDAQ: AVGO) lost 5%.
However, I think November could be the month that these three turn it around, and it’s very easy to see why: 2027 projections.
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Unless you’re investing with earplugs in, these companies have repeatedly said that demand for 2027 AI computing units will be great. This benefits all three stocks, and as investors start to realize that, I think there will be a large rally in this trio. As a result, I think investors should consider taking positions in these stocks now, as they look primed to soar.
Image source: Getty Images.
The AI build-out will intensify in 2027
Whether you’re listening to an AI hyperscaler discuss 2027 plans or listening to one of the trio listed above, it’s pretty clear that 2027 will bring about greater spending than 2026, which is almost hard to fathom.
Nvidia noted that the big five AI hyperscalers plan to spend around $1.3 trillion next year, up from nearly $800 billion this year. It’s so confident in this that it told investors to expect a 70% growth rate next year. Nvidia has this confidence because orders must be placed well in advance to secure computing units during a supply-constrained period like the one the industry is in now.
Nvidia isn’t the only computing unit provider seeing huge growth. Broadcom designs custom computing units tailored to specific AI workloads. These are becoming increasingly popular among AI hyperscalers as a way to maximize efficiency, and Broadcom expects to double its AI semiconductor revenue in 2027.
Those are strong growth projections from both of them, but having a strong market for computing units means strong demand for memory chips, which Micron makes.
The memory chip market has been in a tight spot in 2026, with demand far exceeding supply. This caused memory chip prices to skyrocket, benefiting companies like Micron. 2027 will be no different, as its management team informed investors that they believe 2027 and 2028 will be worse than 2026. That’s almost hard to believe, but it’s likely what will happen with great demand for AI computing.
All three of these stocks have positive catalysts coming up in 2027, but none of them are priced into their stocks.
All of the stocks are quite cheap from a 2027 earnings perspective
Valuing these stocks based on next year’s earnings estimates is a smart idea, as it indicates where the companies are headed. All three of these companies operate on non-calendar-year quarterly cycles, and Micron and Broadcom have already entered fiscal year 2027. Broadcom trades at a cheap 17 times fiscal year 2027’s earnings, while Micron is super cheap at less than 5 times forward earnings.
For comparison, the S&P 500 (SNPINDEX: ^GSPC) trades for about 19 times forward earnings when the next 12 months’ estimates are used. So, it’s pretty easy to realize that all three of these stocks are cheaper than the broader market yet are expected to have fantastic growth years in 2027. I think that the market will realize this in November and send the stocks rallying in preparation for a strong 2027. Buying the stocks before this happens will be key, and now is the perfect time to strike.
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Keithen Drury has positions in Broadcom, Micron Technology, and Nvidia. The Motley Fool has positions in and recommends Broadcom, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
