2 AI Stocks Poised to Surge on the Halloween Effect

The Halloween strategy is a bullish seasonal investment approach that encourages investors to buy stocks in November and sell them in April. Historically, stocks have performed better from November through April. Following this approach, investors should stick to growth-oriented artificial intelligence (AI) stocks during the November-April period, then shift to other asset classes during May to October.  

Although the effectiveness of the strategy remains debatable, growing adoption of AI and strong end-of-year spending on technology could provide additional support to AI-related stocks. On that note, companies including Micron Technology MU and NVIDIA Corporation NVDA could gain from investors’ interest and benefit from the Halloween effect. 

But investors shouldn’t just place their bets on these stocks based on an investing theory. Their strong fundamentals and growth potential offer compelling reasons to buy them now. Let’s take a closer look –   

AI Demand Fuels Micron’s Growth and Earnings Outlook 

Increase in demand for AI infrastructure has fueled growth for Micron’s cutting-edge high-bandwidth memory chips, driving revenues to $54.23 billion in the fiscal fourth quarter of 2026, way more than $11.32 billion a year ago, according to the company’s Sept. 30 press release. For fiscal 2026, revenues also jumped to $133.19 billion from $37.38 billion in fiscal 2025. 

Looking ahead, Micron projects revenues of $61.5 billion, plus or minus $1.5 billion, for the fiscal first quarter of 2027, banking on robust data center demand. The company’s profitability is also improving, with non-GAAP gross margin increasing to 87% in the fiscal fourth quarter from 84.9% in the fiscal third quarter. 

Strategic customer agreements, an optimal product mix, and higher selling prices support Micron’s further growth outlook. The company’s expected earnings growth rate for the current and next quarter is 699.2% and 248.8%, respectively. 

AI Demand and Expanding Margins to Boost NVIDIA’s Growth  

NVIDIA’s revenues soared 106% year over year and 18% sequentially to $96 billion in the fiscal second quarter of 2027, boosted primarily by a jump of 117% in Data Center revenues to $89 billion, according to the company’s Aug. 26 press release.  

Looking ahead, management expects continued growth, with revenues projected to come in at $108 billion, plus or minus 2%, in the fiscal third quarter of 2027. NVIDIA’s Vera Rubin platform has now entered full production, which has positioned the company to gain from the increase in demand for AI infrastructure. 

Meanwhile, NVIDIA’s net income and GAAP operating income have increased. Its gross margin improved to 75% in the fiscal second quarter from 72.4% a year earlier. Strong margins and improving revenues further support NVIDIA’s growth outlook. The company’s expected earnings growth rate for the current and next quarter is 91.5% and 69.8%, respectively. 

While Micron currently has a Zacks Rank #1 (Strong Buy), NVIDIA has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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