Super microcomputerShares of rose more than 30% on November 19 after it appointed a new independent auditor and submitted a compliance plan to Nasdaq to avoid possible deregistration. The announcements were in response to its two pressing issues: the departure of its auditor Ernst & Young in October and the delay in filing its 10-K report, which could result in the delisting of its shares.

But even after this rally, Supermicro’s stock remains 76% below its all-time high from last March. The server maker’s shares are still weighed down by concerns about falling gross margins and competition from larger server makers like Dell Technologies And Hewlett Packard Companyand troubling allegations of inflated income from a prolific short seller. The delay in the annual report and the loss of Ernst & Young seem to support this pessimistic thesis, and the Department of Justice (DOJ) is reportedly preparing to investigate Supermicro’s activities.

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Supermicro Stock Looks Very Cheap at 8x forecast profitsbut it will likely trade at that discount until it completely resolves its accounting and regulatory issues. So instead of betting on Supermicro’s long-term turnaround, investors would probably be better off sticking with these two millionaire blue chips. AI Actions instead: Microsoft (MSFT 1.00%) And Broadcom (AVGO 0.18%).

The leader in AI software: Microsoft

Microsoft has generated a total return of over 900% over the past decade. This rebound, driven primarily by the explosive growth of its cloud business, reportedly turned a $100,000 investment into more than $1 million.

Microsoft has become a still a growth value after Satya Nadella, who became CEO in 2014, pushed the company to transform its desktop software into cloud-based mobile services and applications. He also built Azure into the world’s second-largest cloud infrastructure platform and grew its hardware and gaming businesses.

Over the past five years, Microsoft has ramped up its investment in OpenAI, the maker of ChatGPT, and integrated the startup’s generative AI tools into its own search and cloud services. With this foresight, the company connected more businesses and consumers to its cloud ecosystem, and gained first-mover advantage in the face of AlphabetGoogle and other tech giants in the burgeoning generative AI market.

In fiscal 2024 (which ended in June), Microsoft’s AI-driven transformation increased its total cloud revenue by 23% to $135 billion, representing 55% of its turnover. From fiscal 2024 to fiscal 2027, analysts expect its revenue and earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 14% and 15%, respectively. Its stock still appears reasonably valued, at 28 times next year’s earnings, and it will likely remain one of the biggest players in the AI ​​market for years to come.

The AI ​​chipmaking game: Broadcom

Broadcom, known as Avago before taking over the original Broadcom company in 2016, has generated a total return of 2,300% over the past 10 years. This rally would have turned a $50,000 investment into $1.2 million.

Broadcom’s semiconductor business sells a wide range of chips for the mobile, wireless, networking, data storage and industrial markets. But in recent years, the company has built a broad infrastructure software business by acquiring CA Technologies, the enterprise security division of Symantec, and cloud software giant VMware.

Broadcom’s chipmaking and software businesses are both growing. But over the past two years, its sales of networking and optical chips aimed at the AI-oriented data center market have soared as more companies modernized their infrastructure. For fiscal 2024 (which ended in October), the company expects its sales of AI-oriented chips to roughly triple to $12 billion, or nearly a quarter of its forecast sales for the whole year. This rapid growth is expected to offset slowing sales of non-AI chips and infrastructure software, both of which are more sensitive to macroeconomic headwinds.

From FY 2024 to FY 2026, analysts expect Broadcom’s revenue to grow at a CAGR of 15% while its EPS will grow at a CAGR of 124%. This profit growth is expected to be driven by sustained sales of AI chips and the expansion of its higher-margin software business. Its stock may seem a little expensive, at 42 times forward earnings, but its history of smart acquisitions, strong exposure to the AI ​​market, and robust growth could justify the higher valuation.