If you have a budget of $5,000, Consider These Affordable Artificial Intelligence Stocks to Invest In Immediately
Investing in artificial intelligence (AI) stocks can be a wise move, as there's a high demand for AI-related products and services. However, it's essential to consider valuations to limit your risks. Three stocks with attractive growth prospects in AI and reasonable valuations include Dell Technologies, Baidu, and Advanced Micro Devices (AMD).
Dell Technologies
Dell, a computer manufacturer, has significant potential in the AI world. The demand for its servers is surging, and with companies upgrading their computers to AI-powered machines, the opportunities are endless. Over the past three quarters, Dell's net sales have grown by 8%, with server and networking sales skyrocketing by 61%. While server sales might slow down, an increase in consumer demand could spike the stock's value, which currently has a forward price-to-earnings (P/E) multiple of 12.
Baidu
Baidu, a Chinese tech company, might not be doing well in the stock market (down 18% over the past 12 months), but its forward P/E of less than 9 makes it an even cheaper buy than Dell. Baidu is investing in AI, with a chatbot called Ernie increasing daily API calls from 600 million in August to 1.5 billion in November. Although sales have been sluggish, Baidu's cloud AI business, chatbot, and robotaxi, Apollo Go, provide numerous opportunities for growth in the AI sector.
Advanced Micro Devices
Advanced Micro Devices (AMD) is a bit of a surprise, as its 12-month decline of 35% is a far cry from its growth potential. Although AMD has been late to the AI chip market, it should still be a worthwhile investment given the opportunities ahead. At a forward P/E of 25, it's the most expensive stock on this list, although it's still an attractive valuation compared to other tech stocks. AMD's sales have been growing 18% in its most recent quarter, and the recent launch of its new Instinct MI325X chip hints at even more future growth.
Each of these companies offers attractive investment opportunities in the AI sector with reasonable valuations. Consider incorporating them into your investment portfolio to capitalize on the growing demand for AI.
Enrichment Data:
Dell Technologies
- Current Performance: Dell is expected to experience a 10% YoY revenue growth in fiscal 2025, reaching $96.3 billion. The Infrastructure Solutions Group (ISG) is projected to see mid-20% YoY growth, offsetting the slower 1% decline in the PC segment[1].
- Growth Potential: Dell has a competitive advantage in the AI server market with liquid-cooled AI servers that support up to 72 GPUs per rack, leading in energy efficiency and density[1].
Baidu
- Current Performance: Baidu is expected to grow revenues by 3.8% in 2025, with EPS remaining flat for the year. The company is focusing on AI monetization and leveraging its AI Cloud and Intelligent Driving businesses[2].
- Growth Potential: Baidu's new AI strategy and favorable market conditions provide strong growth catalysts, particularly with the ERNIE bot seeing significant user acquisition and market share gains[2].
Advanced Micro Devices (AMD)
- Current Performance: Data center revenues now exceed 50% of AMD’s total, boosting its growth prospects despite weaknesses in Embedded and Gaming sectors. The company's AI GPU revenue is expected to surge from $5 billion in 2024 to over $20 billion in future years[3].
- Growth Potential: AMD's upcoming chip launches, such as the MI350 series, will spur substantial growth in its AI segment[3].
Dell's strong performance in the server market, with a 61% increase in sales over the past three quarters, makes it an appealing investment option in the AI sector, despite its current forward P/E multiple of 12. Baidu's forward P/E of less than 9 and its significant investments in AI, such as the chatbot Ernie, present an opportunity for substantial growth, despite its recent stock market decline.
Investing in Dell Technologies or Baidu could provide attractive returns due to their potential for growth in the AI sector, while their current valuations offer relatively low risks compared to other tech stocks.