These 10 "Low PEG Ratio" AI Stocks Have Out-Performed The Sector Almost 10-Fold YTD

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An Introduction

An unprecedented wave of IT spending for artificial intelligence amid rising demand for chips, cloud computing, and a massive shift across enterprises and the consumer landscape seeking the best and most innovative tech for the future is underway, a shift that will likely reach well beyond 2024.
 

The PEG Ratios Of the Top 10 "Best Value" AI Stocks 

If you’re looking to kick off the rest of 2024 with companies primed for revenue and earnings growth, strong profitability, and upward analyst revisions, consider the following 10 AI stocks with the best (lowest) PEG ratios. Below are the PEG ratios of the top 10 best value AI stocks, in descending order:

  1. Baidu (BIDU): PEG Ratio: 0.41
  2. ASE Technology (ASE): PEG Ratio: 0.55
  3. Block (SQ): PEG Ratio: 0.56
  4. Unity Software (U): PEG Ratio: 0.62
  5. Zoom Video (ZM): PEG Ratio: 0.68
  6. Twilio (TWLO): PEG Ratio: 0.75
  7. Uber Technologies (UBER): PEG Ratio: 0.81
  8. Super Micro Devices (SMCI):PEG Ratio: 0.81
  9. Box (BOX): PEG Ratio: 0.85
  10. Qorvo (QRVO): PEG Ratio: 0.94
    • 10-stock Average PEG Ratio: 0.70

Please keep in mind that the above PEG ratios are ratios of the current stock prices of the day to the forecast fixed future earnings estimates of the company in 12 months times. As such, the PEG ratios are flexible and will vary daily as the company's stock price fluctuates. Therefore, the PEG ratio will increase as the stock price rises and decrease as the stock price falls.
 

Performance Of the 8 AI Stock Categories vs. the "Best Value" AI Stocks Category

The performance of the 8 AI categories listed below are tracked on a regular basis (see here) by munKNEE.com and are UP 9.9% YTD (as of last Friday, April 12th), on average.  Here are the comparisons:

  1. Semiconductor Chip Category: UP 23.8% YTD
  2. AI-enabled Personal Computer Category: UP 8.3% YTD
  3. Custom Design (EDA) Chip Category: UP 4.1% YTD
  4. Quantum Computing Category: UP 2.3% YTD
  5. Cybersecurity Software Stocks Category: UP 0.6% YTD
  6. Cloud Computing Software Category: DOWN 2.2% YTD
  7. AI-focused Drug Discovery Stocks Category: DOWN 17.5% YTD 
  8. Small Cap AI Stocks Category: DOWN 26.9% YTD

In comparison, the 91 constituent Global X Artificial Intelligence and Technology ETF (AIQ), which best represents the entire AI sector, is UP 7.0%. 
 

Why the PEG ratio?

Given that growth is a key component of a stock's expected return, the PEG ratio provides a simple way for investors to see how cheap a stock is relative to its growth rate and to compare a stock to its competitors.

The PEG ratio (price/earnings-to-growth ratio) builds upon the price-to-earnings (P/E) ratio by factoring in expected earnings growth. It takes into account not just the current earnings but also the company’s growth prospects. It is a quick calculation used to determine if a stock is trading at, above, or below fair value.

  • A PEG ratio below 1.0 suggests that the stock price is undervalued relative to its expected future earnings growth. In other words, the market may not fully account for the company’s growth potential.
  • Conversely, PEG ratios above 1.0 indicate that the stock price might be overvalued, as it isn’t necessarily supported by growth forecasts.
  •  Look for stocks with a PEG ratio below the industry median.
  • The PEG ratio should be used along with the balance sheet, debt burden, and cash flow, or other valuation metrics that use the income statement. It's also important to understand things like a company's competitive advantage, its addressable market, and its long-term growth prospects.
  • It's a convenient rule of thumb but remember that the PEG ratio can vary based on earnings growth forecasts and the time frame being considered.
     

In Summary

  • The AIQ ETF is UP 7.0% YTD,
  • the 8 sector categories are UP 9.9% YTD, on average, and
  • the 10 best PEG ratio AI stocks are UP 68.7% YTD, on average.

Conclusion

In answer to the opening statement that "if you’re looking to kick off the rest of 2024 with companies primed for revenue and earnings growth, strong profitability, and upward analyst revisions, consider the following 10 AI stocks with the best (lowest) PEG ratios" you now have the answer.


More By This Author:

Take Note: Small Cap AI Stocks Continue On Sale! Now -27% YTD
The 10 Stocks In The Clinical-Stage BioTech Drug Stocks Index Are Down 4% YTD
Marijuana Stocks Followed The Leader Last Week Tumbling 12%, On Average

Disclosure: None

This article has been composed with the exclusive application of the human intelligence (HI) of the author. No artificial intelligence (AI) technology has been deployed. ...

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