Why I Just Bought Even More of These 3 Underappreciated AI Stocks

Even though artificial intelligence (AI) has been in the spotlight for several years, not every strong opportunity is getting equal attention. While stalwarts like Nvidia continue to command the spotlight, a quieter group of AI-driven companies is steadily building momentum -- and could ultimately outpace the industry’s biggest names.

These three AI stocks have quietly outperformed the S&P 500 over the past year, and their recent performance suggests they could deliver substantial returns for investors with a long-term perspective.

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Silicon Motion Technology

Investors may have heard about memory storage providers like Micron and SanDisk, which are up by 574% and 2,957%, respectively, over the past year. However, there hasn't been as much fanfare around Silicon Motion Technology (NASDAQ: SIMO), which also offers exposure to the red-hot memory chip industry.

Understanding Silicon Motion Technology's role in the AI boom involves multiple steps. First, memory chips like the ones Micron and SanDisk create go inside Nvidia chips, meaning that all AI chips consist of a bunch of smaller chips.

Memory chips require special components to fully function, including the NAND flash controllers that Silicon Motion Technology creates. Micron and SanDisk are two of the company's largest customers, but those two businesses incorporate a combination of internal NAND flash controllers and the ones that Silicon Motion Technology provides.

While Silicon Motion may not be as central to the AI narrative as its larger peers, its financial performance is clearly gaining momentum. Revenue jumped 46% year over year in the fourth quarter of 2025, and management guided for a “significantly stronger-than-seasonal” start to 2026, supported by a substantial backlog. At the midpoint of its guidance, the company expects 80% year-over-year revenue growth in the first quarter of 2026.

IREN

IREN (NASDAQ: IREN) is a neocloud provider, specifically offering GPU-as-a-Service. The company has multiple AI data centers up and running, with more than 4.5 gigawatts (GW) in secured, grid-connected pipeline, and a lucrative deal with Microsoft that demonstrates its long-term potential.

The 5-year, $9.7 billion deal gives Microsoft access to 200 megawatts (MW) in IREN's Childress, Texas AI data center, which translates to $1.94 billion in annual recurring revenue (ARR) from this deal alone. Stretch that ARR across a 4.5 gigawatt portfolio, and IREN can end up with more than $40 billion in ARR.

That type of potential has attracted many investors to the stock while it still has a market cap below $20 billion. Although IREN secured a grid-connected capacity of 4.5 GW, only 460 MW worth of capacity currently supports AI deployments, meaning the path to $40 billion in ARR will be expensive. IREN spends a lot of money on Nvidia chips and construction to the point where raising debt has become quite common. The company also has a $6 billion at-the-market equity program that it can tap into for additional funds at any time.

That equity program caused a lot of strife among investors and is one of the main reasons IREN is roughly 40% removed from its all-time highs. Eventually, this equity raise won't be a sticking point if it turns out to be a once-in-a-lifetime event and IREN gains business momentum. However, this highlights how capital-intensive running a neocloud can be, as well as the high potential for shareholder dilution.

Will IREN deliver consistent profits while signing more deals with tech companies? That remains to be seen, but if successful, it can outperform the S&P 500 over the long run.

Broadcom

Broadcom (NASDAQ: AVGO) is the most well-known of these three growth stocks, with a market cap approaching $2 trillion. The AI chipmaker produces custom chips for tech giants, while Nvidia's general chips handle various workloads. Broadcom is still competing with Nvidia for market share, but its customized chips have established a solid niche in the AI build-out.

The company already works closely with several hyperscalers and recently extended its partnership with Meta Platforms to develop enough Meta Training and Inference Accelerator (MTIA) chips for multiple gigawatts. The initial commitment exceeds one gigawatt.

This demand helps Broadcom regularly deliver solid financial results, including its 28% year-over-year revenue growth in Q4 FY25. That's part of the company's 24.4% revenue compound annual growth rate (CAGR) over the past three years. The company beat expectations and generated $19.3 billion in revenue in Q1 2026.

The growth isn't stopping anytime soon. Broadcom anticipates $22 billion in Q2 FY26, which would be a 47% year-over-year increase. Net income simultaneously went up by 34% year over year and prompted Broadcom to announce a new $10 billion stock repurchase program. Strong fundamentals and stock buybacks are a winning long-term formula that Broadcom is maximizing for its investors.

Marc Guberti has positions in Broadcom, Iren, and Silicon Motion Technology. The Motley Fool has positions in and recommends Broadcom, Meta Platforms, Micron Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.