On the verge of technology, three giants have quietly been plotting their resurgence. They are ready to reclaim their positions at the forefront of industrial innovation. These companies are considered the titans of their respective domains and are now gearing up again for a remarkable leap that may reshape the tech industry. They are our undervalued tech stocks.
With its cloud and AI infrastructure, the first has been silently constructing a digital empire. It is luring AI startups and unicorns alike into its fold. Meanwhile, the second one has been pioneering the democratization of generative AI, empowering businesses of all sizes to harness AI’s transformative power.
On the other hand, the third is staging a remarkable comeback in the client computing segment. It is backed by a robust ecosystem, strategic pricing adjustments, and cutting-edge products designed to meet the demands of the AI era. The article explores how these undervalued tech stocks will materialize a massive bounceback in the near term.
Alphabet (GOOG)
Alphabet’s (NASDAQ:GOOG) Google Cloud + AI is critical to its fundamental strength. Google Cloud operates a global network of 39 regions, with many more under construction. This extensive infrastructure provides clients with the scalability and reliability needed to modernize their core systems.
On the other hand, Google’s extensive experience in AI, with a 10-year head start on competitors, positions it as a leader in AI infrastructure. More than 50% of funded AI companies and 70% of AI unicorns choose Google Cloud, highlighting its expertise.
In detail, Google Cloud delivers a diverse range of 13 accelerators, providing clients with optimal price-performance choices. The company has also made significant innovations in system design, including optical switching and water cooling, leading to more than 30% improvements in system throughput.
Google’s software innovations, developed in collaboration with DeepMind, parallelize AI model training and inferencing across large clusters of machines. This efficiency translates into two times better efficiency for training and serving models compared to competitors.
Furthermore, the cloud offers edgy products, such as AlloyDB, a high-performance relational database, and Vertex AI, a platform with more than 100 AI models. This diversification caters to both large enterprises and startups. Google Cloud has seen rapid customer growth, with more than 50,000 companies adopting Vertex AI. As a result, Vertex AI has grown 15 times QoQ due to the market’s interest in generative AI. Along with Vertex AI, Duet AI is a vital part of its product strategy to harness the potential of generative AI.
Finally, Alphabet’s efforts in monetizing generative AI also target various industries beyond IT. For instance, Alphabet partners with data providers like Bloomberg, Dun & Bradstreet, and MSCI to offer high-quality, cleansed data for training models and grounding purposes. This easily earns its spot on our list of undervalued tech stocks.
Salesforce (CRM)
Salesforce (NYSE:CRM) has pioneered AI in predictive analytics and played a crucial role in developing generative AI. Salesforce’s AI platform, Einstein, is a testament to its focus on advancing AI capabilities.
In detail, Einstein has evolved beyond predictive analytics and is now a comprehensive AI solution used across industries to augment decision-making, enhance productivity, and exceed customer expectations. Salesforce’s leadership in AI is exemplified by its early investment in AI startups, including OpenAI, which has achieved a remarkable $1 billion revenue run rate. Salesforce’s deep involvement in AI underscores its dedication to staying ahead in the tech buying cycle.
Fundamentally, through democratization, Salesforce makes generative AI accessible and practical for businesses of all sizes and across all industries. The company’s goal is to simplify the implementation of generative AI for every job function, business process, and industry.
Recently, Salesforce has integrated generative AI assistance into its Customer 360 suite, empowering salespeople with tools like Sales Cloud GPT. For instance, Sales Cloud GPT, part of Salesforce’s generative AI offering, provides real-time assistance and recommendations, enabling sales teams to make more informed decisions, improve customer interactions, and drive business growth.
Furthermore, Salesforce’s industry-specific approach is another area where the company thrives. The growth of its industry clouds, with eight of them growing by more than 50% in Q2 2023, demonstrates Salesforce’s ability to cater to the unique needs of various sectors. These industry clouds leverage AI, data, and CRM to deliver tailored solutions.
Overall, Salesforce’s fundamental strength revolves around its AI-powered ecosystem. As AI evolves through predictive, generative, autonomous, and AGI stages, Salesforce is ready to deliver groundbreaking solutions that drive rapid value growth. If you’re looking for undervalued tech stocks, this is a great one.
Intel (INTC)
Intel (NASDAQ:INTC) has made significant strides in regaining market share in the client computing segment. One key driver of Intel’s market share gains is its robust ecosystem, particularly in the enterprise space.
This ecosystem has played a pivotal role in helping Intel recover lost ground. For instance, Intel’s Meteor Lake is expected to further bolster its client computing business. Meteor Lake boasts competitive performance, utilizing the first tile architecture for Intel and integrating Intel 4 technology. Additionally, Meteor Lake addresses AI demands, marking Intel’s foray into this space.
Furthermore, Intel’s renewed focus on strategic pricing adjustments in response to inflationary costs has allowed it to maintain and increase its market share. The pricing strategy aligns with Intel’s focus on delivering premium products. In 2024, Intel anticipates a robust year for the client computing segment, driven by the Windows refresh. The aging installed base presents an opportunity for users to upgrade their systems, spurring demand for Intel’s products.
Contrary to expectations, Intel’s data center business has remained the same and maintains a significant market share. Intel’s Sapphire Rapids product has excelled, particularly in AI workloads. The rapid growth of AI workloads has played to Sapphire Rapids’ strengths, propelling its performance beyond expectations. Nevertheless, Intel’s data center business has performed better than expected (up 8% QoQ in Q2 2023).
Finally, Intel is making notable strides in the core AI space with its Gaudi products. Gaudi1 and Gaudi2 have gained traction, especially in environments where GPUs face high demand. Gaudi offers competitive performance at attractive prices, making it an appealing choice for customers. The pipeline for Gaudi-related business has surpassed $1 billion. Therefore, with Gaudi3 on the horizon, Intel foresees Gaudi generating substantial revenue starting in 2024.
As of this writing, Yiannis Zourmpanos held a long position in GOOG and INTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
