5 Historically Low-cost Artificial Intelligence (AI) Stocks You Can Confidently Buy for the Second Half of 2024 (and Nvidia Is not 1 of Them!)

For roughly 30 years, Wall Street and the investing community have been waiting for the subsequent great innovation to return along that may rival what the arrival of the web did for corporate America. The rise of artificial intelligence (AI) just is perhaps this long-awaited technology.

With AI, software and systems are used instead of humans to oversee and/or undertake tasks. The true value of AI lies in the flexibility of those systems to learn over time without human intervention. This permits AI-driven software and systems to turn into more practical at tasks and even perhaps learn recent jobs over time.

Image source: Getty Images.

Artificial intelligence represents an estimated $15.7 trillion opportunity by 2030

Although estimates are all around the map, as you’d expect from a still relatively unknown technology, the analysts at PwC released a report last yr wherein they estimate AI can add as much as $15.7 trillion to the worldwide economy by the turn of the last decade.

With an addressable market this massive, a whole lot of corporations can come out as winners. But that does not imply you may throw a dart at a written list of AI stocks and robotically earn money.

For the moment, no company is more directly benefiting from the AI revolution than Nvidia (NASDAQ: NVDA). Because the start of 2023, Nvidia’s stock has gained as much as $3 trillion in market value, with the corporate’s board recently approving a 10-for-1 stock split.

Nvidia’s otherworldly gains and textbook operational scaling are the results of its AI-driven graphics processing units (GPUs) becoming the usual in high-compute data centers. With demand for these chips absolutely overwhelming their supply, Nvidia has been capable of meaningfully increase its prices and reap the rewards.

Unfortunately, every next-big-thing innovation over the past 30 years, including the web, underwent an early-stage bubble-bursting event. That is to say that investors consistently overestimate the adoption and/or utility of latest technologies, innovations, or trends. AI will need time to mature, similar to every next-big-thing innovation before it, and that bodes poorly for Nvidia’s stock.

But not all artificial intelligence stocks could be in trouble if the AI bubble burst. Due to their foundational operating segments, the next five historically low-cost AI stocks might be confidently bought for the second half of 2024.

Meta Platforms

The primary low-cost AI stock that you could gobble up with confidence for the latter half of the present yr (and sure hold well beyond 2024) is social media giant Meta Platforms (NASDAQ: META).

The great thing about Meta’s operating model is that it generates near 98% of its revenue from promoting. Regardless that CEO Mark Zuckerberg is aggressively investing in AI data centers, the metaverse, and various augmented/virtual reality devices, Meta’s prime social media “real estate,” coupled with lengthy periods of expansion for the U.S. and global economy, are what power its operating money flow and profits at the tip of the day.

As of the tip of March, Meta was luring 3.24 billion users to its social media platforms every day. Advertisers are well aware that there isn’t any higher alternative to succeed in users than to advertise with Meta.

Even after greater than quintupling from its 2022 bear market low, shares of Meta might be purchased right away for lower than 14 times estimated money flow for 2025. For context, this can be a 6% discount to its average forward-year money flow multiple over the past five years and represents its lowest multiple to money flow in every yr over the past decade, save for 2022.

Two people watching content on a shared laptop.

Image source: Getty Images.

Alibaba

The following exceptionally inexpensive artificial intelligence stock you may buy without fear within the second half of 2024 is China-based e-commerce juggernaut Alibaba (NYSE: BABA).

In accordance with the International Trade Administration, Alibaba is China’s top dog in online retail sales, with Taobao and Tmall accounting for an estimated 50.8% share of China’s e-commerce sales. Even with China’s economy stuck in neutral following the COVID-19 pandemic, an eventual strengthening of the country’s burgeoning middle class should lift the long-term prospects for this segment.

Further, Alibaba Cloud is China’s leading cloud infrastructure service platform by revenue. Alibaba Cloud is where generative AI solutions might be offered to customers to support and enhance their businesses. Enterprise spending on cloud services remains to be in its very early stages of ramping up.

Shares of Alibaba are currently valued at lower than 8 times forward-year earnings, which is a steal once you account for its $85.5 billion in money, money equivalents, and various investments as of March 31.

INTC Price to Book Value Chart

INTC Price to Book Value Chart

Intel

A 3rd AI stock that may shine within the second half of 2024, and sure well beyond, is semiconductor stalwart Intel (NASDAQ: INTC).

There is not any query that Nvidia has left Intel within the dust over the past 18 months. But within the second half of this yr, Intel is releasing its Gaudi 3 AI-accelerator chip on a broad scale. With Nvidia unable to fulfill the demand of all its customers, Intel and its rivals should have the option to simply grab share.

But there’s more to love about Intel than simply its AI ties. Its legacy central processing unit (CPU) operations for private computers and traditional data centers remain a money cow for the corporate. This money is being reinvested in various high-growth initiatives, reminiscent of the corporate’s foundry services segment. By 2030, Intel anticipates becoming the world’s No. 2 chip fabrication company.

By way of value, Intel is trading at 25% above its book value of $24.89 per share. Except for September 2022-March 2023, Intel stock hasn’t been this low-cost, relative to its book value, dating back to the mid-Nineteen Eighties!

Baidu

The fourth bargain AI stock investors can confidently add to their portfolios for the second half of this yr is China-based web search titan Baidu (NASDAQ: BIDU).

Much like Meta, Alibaba, and Intel, the bursting of the AI bubble would not derail Baidu. That is since it’s China’s leading web search engine. Over the trailing-10-year period, it’s pretty consistently accounted for 50% to 85% of web search share for the world’s No. 2 economy by gross domestic product. This implies predictable operating money flow and powerful ad-pricing power for Baidu.

Nonetheless, AI represents the corporate’s future. Baidu’s AI Cloud is China’s fourth-largest cloud infrastructure service platform. Meanwhile, Baidu-owned Apollo Go is the world’s most successful autonomous ride-hailing service, based on total rides since its inception (greater than 6 million). These non-online marketing segments have consistently grown at a faster pace than Baidu’s web search engine.

A forward price-to-earnings (P/E) ratio of only 7 is unbelievably low for an organization sporting roughly $26 billion in money, money equivalents, and short-term investments on its balance sheet.

AMZN Price to CFO Per Share (TTM) Chart

AMZN Price to CFO Per Share (TTM) Chart

Amazon

The fifth historically low-cost AI stock begging to be bought for the second half of 2024 is Amazon (NASDAQ: AMZN), the world’s other dominant e-commerce player.

In accordance with estimates, Amazon accounted for a virtually 38% share of U.S. online retail sales in 2023. But while this segment brings in loads of revenue, it does little for Amazon’s money flow or operating income. Where the corporate generates most of its growth and operating money flow — and where AI will are available handiest — is its ancillary operations.

No segment is more essential to Amazon’s long-term success than Amazon Web Services (AWS). AWS is the world’s leading cloud infrastructure services platform and recently topped $100 billion in annual run-rate revenue. AWS can deploy various AI and generative AI solutions to assist businesses train large language models and run virtual assistants.

Remember about promoting services or subscription services, either. These two segments are also growing by a gradual double-digit percentage on a year-over-year basis. As Amazon’s e-commerce marketplace and content library grow, it should have the option to command a premium subscription price for Prime.

Although Amazon is not low-cost based on the traditionally used P/E ratio, it is historically inexpensive relative to its future money flow. Shares might be purchased right away for around 13 times the consensus money flow in 2025, which is markedly lower than the median multiple of 30 times year-end money flow investors gladly paid to own Amazon stock throughout the 2010s.

Must you invest $1,000 in Meta Platforms right away?

Before you purchase stock in Meta Platforms, consider this:

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Idiot’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of directors. Sean Williams has positions in Amazon, Baidu, Intel, and Meta Platforms. The Motley Idiot has positions in and recommends Amazon, Baidu, Meta Platforms, and Nvidia. The Motley Idiot recommends Alibaba Group and Intel and recommends the next options: long January 2025 $45 calls on Intel and short August 2024 $35 calls on Intel. The Motley Idiot has a disclosure policy.

5 Historically Low-cost Artificial Intelligence (AI) Stocks You Can Confidently Buy for the Second Half of 2024 (and Nvidia Is not 1 of Them!) was originally published by The Motley Idiot

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