These companies’ stocks are bargains compared to their competitors’ and are worth considering right now.
There’s been a lot of fluctuation in the stock market this year, with tech stocks leading most of the movement. Excitement over budding industries like artificial intelligence (AI) has seen countless stocks skyrocket, with the S&P 500 up 15% year to date.
As a result, many stocks are currently trading at a premium, with some standouts including Nvidia and Amazon. These companies are leaders in AI and tech in general, with one dominating the chip market and the other a king in cloud computing. However, there are alternative and better-valued ways to invest in both industries that could deliver major gains in the coming years.
So, here are two no-brainer stocks I’d buy right now without hesitation.
1. Intel
Intel (INTC -0.65%) investors haven’t had a lot of luck this year, with the company’s stock down 38% since Jan. 1.
The decline follows a series of challenges for the company, from a personal computer (PC) market downturn to macroeconomic headwinds and trouble keeping up with rising competition. Wall Street has grown increasingly concerned about Intel’s ability to turn things around. However, recent restructuring suggests a recovery could finally be underway, and it might be worth investing in before it’s too late.
In the first quarter of 2024, Intel’s revenue increased by 9% year over year to $13 billion. The growth is a significant improvement from Q1 2023 when revenue tumbled 36% year over year.
Moreover, Intel is making promising headway in AI. The company’s data center and AI segment posted revenue gains of 5% year over year, while operating income rose more than 2,000%. Meanwhile, Intel has unveiled a range of new AI chips this year, including its Gaudi 3 accelerator and Xeon 6 processors.
However, its expanding foundry business is what could grant Intel a highly lucrative position in AI. The company is heavily investing in chip manufacturing and building plants across the U.S. as it seeks to retake a dominant role in the industry and become the country’s leading AI chip-fabrication company. The move comes just as AI chip demand is soaring, strengthening the company’s long-term outlook.
Data by YCharts.
Additionally, this chart shows Intel is potentially the best value stock in the AI chip market. Its forward price-to-earnings (P/E) and price-to-sales (P/S) ratios are significantly lower than those of Nvidia and AMD, suggesting Intel’s stock is the biggest bargain among the three companies.
Alongside a promising shift in its business, Intel’s stock is a no-brainer right now.
2. Alphabet
Alphabet (GOOG -0.11%) (GOOGL -0.08%) has been somewhat overlooked in the media this year compared to peers such as Amazon and Microsoft. Its third-largest cloud-market share after both companies and some issues with its AI technology have seen critics question Alphabet’s future and ability to compete with its rivals.
However, the company remains a behemoth in tech and is trading at a bargain compared to its competitors, making its stock a compelling buy right now.
Alphabet posted stellar earnings in Q1 2024. Revenue rose 15% year over year to $81 billion, beating Wall Street estimates by close to $2 billion. The company delivered a 14% increase in digital-ad sales from Google Services. Meanwhile, Google Cloud revenue climbed 28%, outperforming Microsoft’s Azure and Amazon Web Services in cloud growth for the quarter.
Alphabet is enjoying solid gains throughout its business. Potent brands like Android, YouTube, and the many products under Google have given the company almost endless advertising opportunities and could now bolster the company’s AI products. The wide use of these platforms could be an asset in getting Alphabet’s AI technology into the hands of billions of consumers.
As a result, I wouldn’t bet against Alphabet’s position in AI over the long term. It might seem behind some of its peers when it comes to the generative technology, but the company has the cash and brand loyalty to go far over the long term.
Data by YCharts.
Moreover, data in the table above shows Alphabet’s stock is a considerably better value than Amazon or Microsoft shares. The figures are impressive, considering Alphabet has delivered more stock growth than both companies since the start of the year.
Alphabet’s lower forward P/E and price-to-free cash flow make it one of the best-valued stocks in tech and a screaming buy this June.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.