5 Historically Cheap Artificial Intelligence (AI) Stocks You Can Confidently Buy for the Second Half of 2024 (and Nvidia Isn't 1 of Them!)

The Lucrative Promise of Artificial Intelligence

For decades, the investment world has eagerly anticipated a revolutionary technology comparable to the advent of the internet. Enter artificial intelligence (AI) – a game-changer that promises to reshape corporate landscapes. AI harnesses software and systems to execute tasks autonomously, continuously learning and evolving, unfettered by human intervention.

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A Multi-Trillion Dollar Opportunity

Projections vary, but PwC’s analysts estimate AI could inject a staggering $15.7 trillion into the global economy by 2030. This vast addressable market presents substantial growth possibilities for numerous companies. However, success is not as simple as randomly picking from a list of AI stocks.

The Nvidia Phenomenon

Currently, Nvidia (NASDAQ: NVDA) is a front-runner in the AI realm. With its AI-driven GPUs driving high-compute data centers, Nvidia’s stock has escalated dramatically, adding $3 trillion in market value since 2023. The recent 10-for-1 stock split underscores Nvidia’s meteoric rise, fueled by insatiable demand for its chips.

Yet, history has shown that overhyping nascent innovations often leads to early-stage setbacks, and AI is no exception. As AI matures, companies like Nvidia could face challenges.

Meta Platforms: A Hidden Gem

Meta Platforms (NASDAQ: META), a social media titan, is a hidden gem for investors seeking AI exposure. Boasting a revenue stream heavily reliant on advertising, Meta cleverly leverages AI to enhance user experiences. With Zuckerberg at the helm and a robust operating model, Meta continues to reel in billions of users daily, making it a top choice for advertisers.

Despite its stock surging fivefold since its 2022 low, Meta’s current valuation at less than 14 times estimated cash flow for 2025 offers an attractive entry point, signaling a potential bargain compared to previous years.

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Alibaba: China’s AI Powerhouse

Alibaba (NYSE: BABA), the e-commerce giant, is another AI stock poised for growth. Dominating China’s online retail space, Alibaba’s platforms, Taobao and Tmall, capture over half of China’s e-commerce market. Bolstered by Alibaba Cloud, China’s top cloud service platform by revenue, Alibaba offers cutting-edge AI solutions to drive business innovation and growth.

Enterprise spending on cloud services is just beginning to gain momentum, setting the stage for significant growth in the future.

An Undervalued Gem: Alibaba

Amidst the market volatility, Alibaba’s stock is valued at less than 8 times its forward-year earnings, a remarkable steal considering its massive cash reserves of $85.5 billion as of March 31.

Intel: A Phoenix Rising?

After playing catch-up to Nvidia in recent years, Intel is poised for a resurgence. The upcoming release of its Gaudi 3 AI-accelerator chip is expected to be a game-changer, especially given Nvidia’s struggles to meet the demand from its customers. Additionally, Intel’s traditional CPU segment continues to be a cash cow, fueling its growth in high-potential areas such as foundry services.

Trading at a modest premium above its book value, Intel presents a compelling investment opportunity, especially considering its historical valuation dating back to the 1980s.

Baidu: Chinese Technological Prowess

Baidu, China’s premier internet search engine, stands out as a reliable investment choice even in the midst of an AI market correction. With a dominant market share and robust AI initiatives, such as its AI Cloud and autonomous ride-hailing service, Baidu is well-positioned for sustained growth. Despite its substantial cash reserves, Baidu’s forward P/E ratio of 7 is exceptionally low, making it an attractive prospect.

Amazon: E-Commerce Giant

As the leader in U.S. online retail, Amazon’s core e-commerce business continues to thrive. However, the real growth lies in its ancillary operations, particularly Amazon Web Services (AWS). Surpassing $100 billion in annual run-rate revenue, AWS’s utilization of AI solutions is poised to drive further innovation and market expansion.

Furthermore, Amazon’s advertising and subscription services are experiencing robust growth, indicating a promising future for the company. Although Amazon may not appear cheap based on traditional metrics, its historical affordability relative to future cash flow presents an enticing investment opportunity.

The Power of Stock Advisor: A Glimpse into Investment Success

Unveiling a Lucrative Historical Snapshot

Imagine the financial landscape back in April 15, 2005, where Nvidia graced a list of recommendations. If you had the foresight to invest $1,000 at that propitious moment, your financial acumen would have blossomed to a staggering $751,670! That’s the stuff of dreams materializing into reality, a feat that reflects astute decision-making entwined with market savvy.

A Roadmap to Financial Eminence

Stock Advisor serves as a beacon for investors navigating the often tumultuous waters of financial markets. It offers a well-crafted blueprint for success, providing a seamless path for constructing a resilient portfolio. With regular updates from seasoned analysts and the unveiling of two fresh stock picks monthly, the service has soared above and beyond, showcasing a remarkable performance that outshines the S&P 500 by more than fourfold since its inception in 2002. Such a track record is a testament to the foresight and acumen embedded within the ethos of Stock Advisor.

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*Stock Advisor returns as of July 2, 2024