Artificial Intelligence is everywhere, shaping our futures. It will indeed change the way businesses operate, and the companies that invest in AI now will have full advantage.
AI news has been dominating the media for the past few months and will continue to be 2023’s buzz word. In the same way the Internet changed our lives forever, AI could do the same.
Having witnessed the tremendous success of Nvidia (NASDAQ:NVDA), all investors are looking for AI stocks to buy. While every company isn’t worth your money, some stocks are highly undervalued. Let’s take a look at three cheap AI stocks to buy.
Oracle (NYSE:ORCL) was developed in 1977, and has been a leading enterprise database management system for over three decades. This first pick is currently an undervalued stock and has come to the limelight after the growing popularity of AI.
It is now becoming an AI leader with its years of experience and expertise to navigate a larger market. One reason to bet big on Oracle is its product. It’s been known for the enterprise resource planning software system and enjoyed widespread popularity by companies across industries. It also offers cloud data center infrastructure which has seen a solid adoption rate. Its biggest client is Nvidia, a leader in the tech space. ORCL stock is trading at $117 today and is up 40% year to date. The stock has gone from $83 to $117 in 2023.
In the recent quarter, the company saw a 54% increase in cloud revenue and a 17% growth in total revenue. So although not all segments of the company are performing equally well, the demand for cloud is rising. In other words, we may see better revenue numbers going forward. The company is likely enjoying an advantage over its competitors due to its long-standing presence in the industry. It is using AI to thrive amid the competition and has recently introduced AI to its human resource software to increase productivity.
Oracle has an exceptional product and an A-list clientele. I believe the stock has plenty of upside from the current level. Its dividend yield of 1.38% is another reason to buy and hold one of the cheap AI stocks.
Denver-based Palantir (NYSE:PLTR) originated in 2003 and has been steadily strengthening its position. No other company has been able to match its capabilities. It uses AI to make the systems smarter, investing in the platform that can process data from large language models. For a decade, the company has helped the government and other organizations manage and analyze data.
A long-time belief has been held by investors that Palantir was highly dependent on government entities for contracts. But over time, the company managed to attract a large number of private organizations and expanded its client base. It also saw a whopping 41% rise year over year in customer base for the first quarter. Its revenue hit $525 million, forecasting solidly for Q2.
PLTR stock is exchanging hands at $19.84 today and is up over 200% year to date. Looking at the company’s potential, the stock looks undervalued. Wedbush analyst Dan Ives thinks that the stock is headed to $25 in the next year. The analyst believes that the tech firm will become one of the biggest firms in the AI space in this decade.
Palantir already used AI for its services but is now harnessing its power to increase efficiency. It has the capability and a large customer base to be able to make the most of AI. The company is set to report results on August 7. PLTR is one of the affordable AI investments to make.
A well-established name in the industry, Intel (NASDAQ:INTC) is going all out to make a market impact with its AI technology.
It sells data center GPUs and is in the news for the Gaudi2 AI chip. This chip has become the center of the company’s business, increasing traction within the industry. With a surge in demand, it’s already shipping the chip to Amazon (NASDAQ:AMZN) Web Services. While it may not be able to beat Nvidia’s chips, Intel can cater to customers who do not want to wait for weeks to get Nvidia chips. It is one of the best cheap AI stocks to buy.
The company has already secured commitments from major industry players for the Gaudi2 chips. It plans to launch new products in the coming years which could drive the business further. It will launch Gaudi3 chips in 2024, and it can benefit from the rising demand for AI accelerators, too.
One reason to bet on the company is its diversified business. While the PC and CPU business is struggling, this downturn in demand has been balanced by the rise in demand for its AI chips. It also managed to report a profit in the second quarter after consistent losses. INTC stock is trading at $35 today and is inching closer to the 52-week high of $40. Considering the company’s long-term potential, it still looks cheap to me.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.