Over the last year, increased interest in artificial intelligence (AI) has spotlighted several tech stocks that could enjoy major gains as the industry develops. Chipmaker Advanced Micro Devices (NASDAQ: AMD) has seen its stock soar 150% since the start of 2023, driven primarily by investors’ excitement over AI. AMD’s second-largest market share in graphics processing units (GPUs) has made Wall Street bullish as similar offerings from Nvidia have flown off the shelves amid the increased demand for the high-powered chips.
However, mediocre quarterly results, alongside a soaring share price, have tanked the value of AMD’s stock. The company’s business hasn’t seen a big enough return on its investment in AI, suggesting there could be better options for backing the high-growth industry.
AMD PE Ratio Chart
This chart uses price-to-earnings (P/E) ratios to compare the valuations of some of the most prominent names in AI. AMD’s stock is by far the worst value, with a P/E of 238. However, two companies stand out as bargains compared to their peers: Intel (NASDAQ: INTC) and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG).
These companies have expanding ventures in AI that could majorly pay off over the long term, with one investing in AI chip manufacturing and the other quickly growing in AI software.
So, forget AMD in 2024 and consider buying one of these AI stocks instead.
1. Intel: Delivering growth in multiple areas of its business
Intel investors haven’t had it easy in recent years, with its stock down 35% since 2019. The company was once the biggest name in the chip market, dominating manufacturing and boasting a lucrative partnership with Apple as the leading chip supplier for its Macs. However, trouble keeping up with competitors like AMD and Nvidia caused Intel to fall behind and lose market share.
Yet, sometimes, the best test of a company is how it responds to challenges, and recent developments suggest Intel could come back strong in the coming years. The chipmaker has increased its market share in central processing units (CPUs) for three consecutive quarters. Since the…
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