Image Source: Unsplash

An Introduction

If you’re looking for AI companies primed for revenue and earnings growth, strong profitability, and upward analyst revisions, consider investing in one or more of the stocks highlighted in this article based on their most recent current stock price relative to their forecast earnings growth over the next 12 months, i.e. their PEG ratio.

What Is the PEG Ratio?

The PEG ratio:

• provides a simple way for an investor to calculate how cheap a stock is relative to its growth rate and to compare a stock to its competitors,
• builds upon a stock's current price-to-earnings (P/E) ratio by factoring in its earnings growth prospects in the ensuing year,
• determines if a stock is trading at, above, or below, fair value and if the stock is priced above, or below, the industry median.
  • 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,

A PEG ratio should be used along with an analysis of the company's balance sheet, debt burden, and cash flow and other valuation metrics that use the income statement and it's important to understand things like a company's competitive advantage, its addressable market, and its long-term growth prospects.

The 17 "Best Value" PEG Ratio AI Stocks 

Below is an update of the 17 AI stocks with the best PEG ratios, in descending order:

1. Block (SQ): PEG Ratio: 0.50
2. Intel Corporation (INTC): 0.58
3. Unity Software (U): 0.58
4. ASE Technology (ASX): 0.63
5. Twilio (TWLO): 0.64
6. Uber Technologies (UBER): 0.70
7. Baidu (BIDU): 0.80
8. Super Micro Devices (SMCI): 0.80
9. Box (BOX): 0.80
10. Qorvo (QRVO): 0.91
11. UiPath (PATH): 0.98
12. Altassian (TEAM): 0.98
13. Nvidia Corporation (NVDA): 1.11
14. Taiwan Semiconductor (TSM): 1.11
15. DocuSign (DOCU): 1.11
16. Advanced Micro Technology (AMD): 1.12
17. Meta Platforms (META): 1.26  
    • 17-stock Average PEG Ratio: 0.895

Please keep in mind that the above PEG ratios are the current stock prices of the day relative to the 12-month earnings estimates of the company and that they will vary throughout the trading day as the company's stock price fluctuates - the PEG ratio will increase as the stock price rises and decrease as the stock price falls.

Conclusion

The above analysis provides the answer to the opening statement about looking for AI companies primed for revenue and earnings growth, strong profitability, and upward analyst revisions. You now have a short list from which to do your own due diligence before proceeding further.

Please Note: You are encouraged to provide any comments or questions you might have in the Comment section and become automatically entered into TalkMarket's draw to win a free Echo Show. All comments and questions will be replied to by Lorimer within 24 hours of submission.

More By This Author:

These 5 AI Stocks Are Reaching Sell Territory; Here's Why
All 12 Constituents In The Cannabis Portfolios Declined W/e May 24th
Largest Clinical-Stage BioTech Drug Stocks Declined Slightly Last Week