The 3 Most Undervalued AI Stocks to Buy in July 2024

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  • These are some of the top undervalued AI stocks to buy.
  • Alphabet (GOOG, GOOGL): Gemini and Google Cloud can drive more revenue growth as the company diversifies beyond advertising.
  • Qualcomm (QCOM): The chipmaker has enjoyed a resurgence this year.
  • Meta Platforms (META): Profit margins are expanding at a rapid pace.
undervalued AI stocks - The 3 Most Undervalued AI Stocks to Buy in July 2024

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The artificial intelligence boom has propped many stocks nicely at all-time highs. Industrial tailwinds can carry these stocks even higher as revenue and net incomes continue to surge. While some stocks have captured public attention for a few years, other AI stocks remain undervalued. Investors can also find stocks in the spotlight that remain surprisingly undervalued based on their growth opportunities, financial performances, and valuations.

Artificial intelligence is still in its early innings based on Statista’s data. The industry is projected to maintain a compounded annual growth rate of 28.46% from now until 2030. The United States is projected to be the largest market during the AI boom. The AI market size is projected to be $184.0 billion this year.

Many investors have been turning to the stock market to get their slices of the pie. As many AI stocks continue to soar, these top picks still present compelling opportunities.

Alphabet (GOOG, GOOGL)

Alphabet Inc. (GOOG, GOOGL) and Google logos seen displayed on a smartphone
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Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has been using artificial intelligence for several years to enhance its search engine and cloud platform. The company also recently launched Gemini and got through some hiccups at the start of the year. This AI stock isn’t exactly a secret. It’s one of the Magnificent Seven stocks and commands a valuation above $2 trillion. Shares are up by 38% year-to-date and have more than tripled over the past five years.

Despite the strong momentum, Alphabet still trades at a 30 P/E ratio. That’s reasonable given the company’s financial performance. Net income increased by 57% year-over-year in the first quarter as Alphabet continued to reduce costs. Revenue increased by 15% year-over-year.

Alphabet should continue to benefit from artificial intelligence as more businesses turn to Google Cloud. The company’s cloud computing platform makes it easier to store data and enable AI tools to perform at their best. Wall Street analysts believe this catalyst will drive the stock higher, based on the consensus Strong Buy rating.

Qualcomm (QCOM)

Qualcomm (QCOM) logo on side of headquarters
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Qualcomm (NASDAQ:QCOM) is starting to gain momentum after missing out on most of the 2023 rally. Shares of the semiconductor giant are up by 47% year-to-date and have gained 168% over the past five years. Qualcomm offers a 1.65% yield and trades at a 28 P/E ratio. The company has raised its dividend for several years, including a 6.25% dividend hike this year.

After posting a few quarters of declining revenue and earnings, Qualcomm flipped the script in the second quarter of fiscal 2024. Revenue increased by 1% year-over-year while net income jumped by 37% year-over-year. Qualcomm is enabling leading on-device AI capabilities across multiple product categories, and that should help the company deliver solid financial results for several quarters. 

Qualcomm returned $1.6 billion to shareholders through stock buybacks and dividend distributions. Some Wall Street analysts believe Qualcomm is set to return even more to its investors. The stock is rated as a Moderate Buy, and the highest price target of $270 per shares implies a 31% upside.

Meta Platforms (META)

In this photo illustration the Meta logo seen displayed on a smartphone and in the background the Facebook logo
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Meta Platforms (NASDAQ:META) uses artificial intelligence to power its social media platforms. AI allows algorithms to display content that keeps people engaged and clicking on more ads. The company is making big investments into artificial intelligence and virtual reality to diversify its income streams. While advertising is the main revenue driver for now, it’s been delivering good results for many years, including the first quarter.

The social media giant reported 27% year-over-year revenue growth in Q1 2024. Net income grew by 117% year-over-year, resulting in a net profit margin of 33.9%. Meta Platforms has 3.24 billion daily active users on its platform. The company generates plenty of attention and has a vast user base that gives them a head start with any AI initiatives. 

Meta Platforms has received praise from several Wall Street analysts and is currently rated as a Strong Buy. The highest price target of $600 per share implies an 11% upside for the stock.

On this date of publication, Marc Guberti held a long position in GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.


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