2 Hypergrowth Artificial Intelligence (AI) Stocks Smart Investors Are Loading Up On

Following the lead of institutional investors and hedge funds is a great idea for individual investors. These entities often have a lot more information than the average investor does, and by following their example, investors can find great investment ideas that lead to huge returns.

Two stocks that smart investors have been loading up on are Micron Technology (NASDAQ: MU) and Nebius Group (NASDAQ: NBIS). Both of these companies are growing rapidly and are backed by some industry titans.

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Micron Technology

Micron has been a popular AI investment over the past year, with the stock rising a jaw-dropping 815%. One investor who has captured a lot of that rise is billionaire David Tepper, who runs Appaloosa Management. Micron is the fund's second-largest holding, and it even added some more shares during the first quarter because it was so bullish on the stock.

This makes a ton of sense, as Micron is thriving from the memory chip shortage. It makes both types of memory, NAND and DRAM, each of which is used in its own way in data centers. Both are in short supply, driving prices higher and leading to huge revenue and earnings growth for Micron.

This shortage isn't expected to abate anytime soon, so Wall Street has turned extremely bullish on the stock. Yet its valuation remains relatively low.

MU PE Ratio (Forward) data by YCharts

At less than 19 times forward earnings, it trades at a discount to the broad market, as measured by the S&P 500, which trades for 22 times forward earnings. If Micron can stretch this growth into next year, then it will continue to rise. Luckily, Wall Street analysts believe the memory chip market won't see a drawdown in 2027, and predict Micron's revenue will rise 66% next year. That's a huge growth rate and will make Micron a smart stock to buy and hold over the next few years as data center demand continues to put pressure on memory chip supply.

Nebius Group

Nebius is one of the companies contributing to the memory chip shortage, as it's a neocloud company rapidly expanding its data center footprint. One company that knows a lot about this space is Nvidia, which is also a Nebius investor. Nvidia only owns seven stocks as a company, so when you see it take a position, you had better pay attention. Nvidia has agreed to give Nebius early access to new technology, making it an obvious partner for those looking for an AI-focused cloud computing platform.

Nebius has grown rapidly thanks to strong AI demand, with revenue rising a stunning 684% in Q1. But it's not done. Wall Street analysts estimate Nebius' revenue growth will be 550% this year and 225% next year. By the end of 2027, they expect about $11.2 billion in revenue, well over 10 times higher than today's $878 million trailing-12-month total.

With rapid expansion like that, it's no surprise Nvidia is a major investor in Nebius. There's plenty of upside ahead for Nebius if it can live up to these expectations, and if stock price appreciation follows the growth trajectory, then Nebius will be a no-brainer stock to buy and hold over the next few years. Nebius could emerge as one of the top AI-focused cloud companies, which is an excellent place to be. I think Nebius is a great investment to make now, and if you're looking for ultimate upside, I know of few better stocks.

Keithen Drury has positions in Nebius Group and Nvidia. The Motley Fool has positions in and recommends Micron Technology and Nvidia. The Motley Fool has a disclosure policy.