Two Budget-Friendly Stocks Primed for a Bull Market Surge
Artificial intelligence (AI) has catapulted some tech giants like Nvidia and Palantir Technologies to lofty valuations, leaving some investors pondering if affordable AI stocks still exist in this sector. Yet, the AI boom hasn't been a broad spectacle, signifying that there's untapped potential among AI stocks. For those eager to uncover new opportunities, there are tantalizing bargains lurking that could soon embark on a bullish surge. Here are two such promising stocks primed for a rebound.
1. Google (Alphabet)
Alphabet may seem like an unlikely choice, given its inclusion in the "Magnificent Seven" for its stellar track record. However, concerns stemming from the release of ChatGPT left chinks in its armor, leading some to question its relevance. Still, Google struck back with a formidable response in the competitive generative AI market, which, despite teething issues, demonstrated its potential regarding AI.
Going beyond generative AI, Alphabet's Willow quantum computing chip is a game-changer, turning five-minute tasks into ones that would take billions of years on a traditional computer. What's more, this technological marvel demonstrated a significant reduction in calculation errors, tackling a critical barrier that slowed progress in quantum computing.
Alphabet's finances echo the ripple effects of this tech-driven growth. The company reported a 15% revenue surge to $254 billion in the first nine months of 2024, with AI playing a crucial role in propelling Google Cloud revenues by 31%. Besides, the company increased its investment in property and equipment by 72% to $38 billion in 2024, signaling a heightened commitment to AI-related innovation.
Despite an impressive 40% stock gain over the previous year, Alphabet is still the most budget-friendly Magnificent Seven stock, trading at just 26 times earnings. With its unrivaled tech breakthroughs and ability to tackle quantum computing's challenges, Alphabet may just be the overlooked investment gem with a relatively inexpensive price tag.
2. Qualcomm
Smartphone chipset manufacturer Qualcomm could be the often-overlooked treasure trove of AI-driven value. Qualcomm's fortunes have taken a temporary dip due to the loss of a significant Chinese customer and the potential switch to an Apple-designed chipset. Nonetheless, Qualcomm has its sights on the horizon, diversifying its revenues through advancements in Internet-of-Things (IoT), automotive, and PC chips.
Qualcomm's ventures into AI boast significant payoffs. For instance, its Snapdragon 8 Gen 3 chipset capitalizes on the burgeoning AI landscape. Meanwhile, the company's automotive segment has experienced impressive growth, up by 55% in fiscal 2024, signaling promising developments for Qualcomm's long-term transformation.
Analysts forecast a 9% growth rate for fiscal 2025, which might seem a tad underwhelming. However, trading at a mere 18 P/E ratio and a market cap of $172 billion, Qualcomm's share price might be screaming for a reconsideration. The inherent appeal of its AI-focused offerings, a more favorable valuation, and its commitment to diversification make Qualcomm a tantalizing AI-related stock pick.
In essence, AI's impact on the stock market extends far beyond the headline-grabbing success stories. There remains an abundance of potential waiting to be discovered in promising AI stocks, even as their high flyers grace the spotlight. Whether it's personalized search with Alphabet or the AI-driven future of Qualcomm, there's a world of possibilities to explore. But never forget – with AI, as with any investment, the key lies in striking a well-informed balance between risk and reward.
1.While Alphabet's stock price has shown a significant increase, with a 40% gain over the previous year, some investors might find it an affordable investment opportunity in the AI sector, given its relatively low price-to-earnings ratio of 26 times.2.Qualcomm, often overlooked in the AI sector, presents a budget-friendly option for investors, trading at a mere 18 P/E ratio and a market cap of $172 billion. Analysts forecast a 9% growth rate for the company, which, combined with its focus on AI-driven offerings and commitment to diversification, makes Qualcomm an attractive AI stock pick.
