These 8 AI Stocks Still Look Well Valued

By Lorimer Wilson munKNEE.com
Monday, January 15, 2024 4:33 PM EST

Photo by Steve Johnson on Unsplash


Introduction

Artificial intelligence and related (AI&R) stocks were UP 52%, on average, in 2023, as measured by the 91 constituent Global X Artificial Intelligence and Technology ETF (AIQ), and this article identifies the 8 that still exhibit more room to run in 2024 based on their current excellent Price-to-Earnings (1-year) Growth (PEG) Ratio valuation metrics. 


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 for comparing stocks to competitors. The lower the PEG ratio - lower than 1.0 is best - the more the stock may be undervalued given its future earnings expectations while a ratio greater than 1.0 generally suggests a stock is overvalued.

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.


The Best Value AI Stocks Portfolio

This article highlights the performances last week of the 8 "best value" AI&R stocks, in descending order, along with their respective PEG ratios and any recent news, commentary, and/or analysis on each company:.

  1. Nvidia Corporation (NVDA): UP 11.4% last week
  2. Salesforce (CRM): UP 8.3% last week
  3. Advanced Micro Devices (AMD): UP 5.8% last week
  4. Broadcom (AVGO): UP 5.6% last week
  5. Palantir Technologies (PLTR): UP 4.9% last week
  6. Allassias (TEAM): UP 4.8% last week
  7. Dell Technologies (DELL): UP 4.6% last week
  8. UiPath (PATH): DOWN 1.9% last week

It will be interesting to see just how the performances of the above 8 stocks pan out in 2024. It will be a good test as to the merits of the PEG ratio as a valuation metric.

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Disclosure: None

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