Skip Overhyped Nvidia and Grab These 3 Undervalued Stocks
Uncovering cheap stocks amid the noise of overvalued and overhyped stocks like Nvidia (NASDAQ:NVDA) is essential in today’s volatile stock market. Three undervalued AI stocks are set up for significant growth in this case. With innovation, profitability, and astute market positioning, each business offers investors a distinctive opportunity inside the semiconductor and technology industries. Starting with the first one, well-known for producing cutting-edge processors that power consumer electronics and data centers, one can understand why the stocks stand out. The next, known for its expertise in data analytics, keeps surprising with its growing commercial presence and profitability.
Meanwhile, the last company on the list is causing a stir with its revenue growth in semiconductor manufacturing solutions. With that, there are improvements in operational efficiency. Investigating these three businesses is crucial for investors hoping to profit from equities with solid fundamentals and room to develop. Every company strongly argues for being included in a diverse portfolio aimed at long-term growth. In short, they have supremacy in processor technology, solid business strategy in data analytics, or calculated expansion in the semiconductor markets.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) leads the design and manufacturing of semiconductor and AI products. Indeed, the company’s client business has driven solid growth. This is because of the high demand and decisive performance of AMD’s Ryzen 8000 series CPUs. For Q1 2024, the division had sales of $1.4 billion, signifying an 85% year-over-year (YOY) growth. The strong sales of Ryzen desktop and mobile CPUs led to this growth. There is a solid growth potency, as these chips are embedded in devices from major original equipment manufacturers like HP (NYSE:HPQ) and Lenovo (OTCPK:LNVGY).
Additionally, AMD’s sharp boost in the client market is mainly based on how its product line incorporates AI capabilities. This strategic integration aligns with the expected expansion of AI in the PC industry. AMD believes that this signals a major turning point. AMD may thrive and expand in the AI PC market because of its partnerships with Microsoft (NASDAQ:MSFT) and more than 150 independent software vendors (ISVs) to create AI apps for Ryzen CPUs.
Overall, AMD is on the undervalued AI stocks list due to its strong market position in the client segment and vital strategic partnerships.
Palantir (PLTR)
Palantir (NYSE:PLTR) provides data integration and analytics software solutions for government agencies and commercial enterprises. The company’s top line was $634 million in Q1 2024, representing a 21% YOY gain. Strong momentum in its government and commercial areas propelled this expansion. In Q12024, Palantir’s adjusted operating margin increased to 36%, demonstrating the robust unit economics of its business strategy. This margin improvement and sales growth helped the company achieve a Rule of 40 score of 57%. This indicates a solid balance between profitability and revenue growth.
Moreover, Palantir’s US commercial business had a solid growth rate. In Q1 2024, revenue from the US commercial division increased by 40% YOY to $150 million. Several factors helped to fuel this expansion. These are significant increases in the number of customers (69% YOY) and Total Contract Value (TCV), with $286 million booked in Q1 (a 131% YOY gain). The company can grow its current clientele and draw in new ones. This demonstrates the versatility and potency of its offerings, such as the AI Platform (AIP).
To sum up, Palantir is on the undervalued AI stock list for its constant profitability and expanding customer base.
ACM Research (ACMR)
ACM Research (NASDAQ:ACMR) provides equipment and services for semiconductor manufacturers. To begin with, in Q1 2024, the company’s top line from single wafer cleaning increased to $109.5 million. There has been a massive 199% gain against Q1 2023. With that, ACM’s operating margin increased to 26.2% from 14.7% in Q1 2023. This enhancement is based on operational leverage, economies of scale, and efficient cost management over operations. As a proportion of sales, total operating expenditures dropped from 41.9% to 35.4%, indicating increased operational efficiency.
Further, ACM has a CapEx of $25.4 million for Q1 and an estimated $100 million for 2024. This demonstrates the company’s focus on growing its facilities, especially in Lingang, Shanghai. The company is also improving its operating capacities in important markets such as the US and Korea. ACM’s expanding worldwide footprint is reflected in its strong acceptance and favorable feedback from foreign markets, including the US, Europe, and Asia, and its important ties with major semiconductor manufacturers in China, Korea, and other countries.
Finally, ACM Research was included in the undervalued AI stocks list due to its rapid revenue growth and strategic expansion in key global markets.
As of this writing, Yiannis Zourmpanos held long positions in AMD, PLTR and ACMR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing 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.
