While artificial intelligence will almost surely play a significant role in future innovations, you don’t have to pay full price, which brings us to undervalued AI stocks. Primarily, we all know that digital intelligence commands significant attention. According to Grand View Research, the global AI market size reached $136.55 billion last year.
Even better, analysts in the field project that the sector will expand at a compound annual growth rate (CAGR) of 37.3% from 2023 to 2030. By the culmination of the forecast period, the industry should hit revenue of over $1.81 trillion. Again, though, you don’t have to pay full retail, which brings us to the best value AI stocks to buy.
Fundamentally, with so many people chasing the flavors of the week, certain enterprises have become significantly overpriced. At the same time, some enterprises have become less appreciated than they deserve. Therefore, investors should target these top undervalued AI stocks.
Skyworks Solutions (SWKS)
An American semiconductor company, Skyworks Solutions (NASDAQ:SWKS) ranks among undervalued AI stocks thanks to its pioneering work regarding audio and voice technology innovation. Specifically, the company develops analog systems on chips (ASoCs) for AI applications such as smart speakers and microphones, virtual assistants, and intelligent gaming controllers. In addition, its tech is also incorporated into automotive in-dash systems.
Since the beginning of this year, SWKS gained almost 16% of its equity value. Over the trailing one-year period, it’s up nearly 7%. Nevertheless, it may feature a sustained upside. For one thing, the company is both consistently profitable and commands a growth machine. Per Gurufocus, Skyworks’ three-year revenue growth rate (on a per-share basis) clocks in at 20.2%, above 70% of its peers.
Further, SWKS represents one of the best value AI stocks to buy because it prints a forward multiple of only 10.58. As a discount to projected earnings, Skyworks ranks better than 89.31% of the competition. Finally, analysts peg shares as a moderate buy with a $113.25 price target (implying over 8% upside).
Qualcomm (QCOM)
A multinational corporation, Qualcomm (NASDAQ:QCOM) manufactures semiconductors, software, and services related to wireless technology. It’s one of the top undervalued AI stocks to buy thanks to its acumen in device connectivity solutions. As Qualcomm states on its website, more intelligence is moving to end devices and mobile is becoming the dominant AI platform. Therefore, the company is organically positioned to benefit.
Since the start of the year, QCOM gained just under 9%. Over the past 365 days, shares slipped more than 8%. While the market might not appreciate the tech stalwart right now, you don’t want to make the same mistake. Per Gurufocus, the market prices shares at a forward multiple of 11.82. As a discount to projected earnings, the company ranks better than 86.26% of sector rivals.
Also, Qualcomm enjoys consistent profitability and a three-year revenue growth rate of 25%. This latter stat beats out 78.48% of competing firms. Lastly, analysts peg QCOM as a moderate buy with a target of $135.26 (implying 16% upside). Thus, it makes a great case for AI stocks with high potential.
Leidos (LDOS)
An American defense, aviation, information technology and biomedical research firm, Leidos (NYSE:LDOS) commands a wide footprint. Per its website, Leidos’ cutting-edge tech makes AI and machine learning algorithms trustworthy, resilient, and secure. Not only that, the company delivers its digital intelligence across multiple applications, from defense needs to civilian purposes such as biotech.
To be 100% fair, LDOS may represent one of the top undervalued AI stocks on paper. However, it’s also incredibly risky. Since the beginning of this year, shares fell nearly 18%. Over the trailing one-year period, they’re below parity to the tune of over 15%. Still, for those with patience and nerves of steel, Leidos could be intriguing.
Specifically, it features decent revenue growth and consistent profitability. Moreover, the market prices LDOS at a forward multiple of 13.03. As a discount to projected earnings, Leidos ranks better than 81.3% of its peers. To close, analysts peg LDOS as a moderate buy with a $101.60 price target (implying over 18% upside).
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
