You don’t need another reason to justify AI stocks to invest in. According to Precedence Research, the global artificial intelligence market reached a valuation of $454.12 billion last year. Further, experts project that from 2023 to 2032, the segment will expand at a compound annual growth rate (CAGR) of 19%, leading to an industry worth over $2.57 trillion.
However, what you do need is to acquire relevant ideas at a reasonable rate. With AI stocks soaring, most of the usual suspects command ridiculous premiums against key financial metrics. Sure, they could move higher. But at some point, even the most ardent, dedicated sector apologists will question the prudence of bidding frenzies.
So, if you want to buy AI stocks today, you should do just that. Few sectors as relevant and impactful as digital intelligence exist. Nevertheless, you should look out for number one and consider these undervalued AI enterprises.
Interactive Brokers (IBKR)
At first glance, multinational brokerage firm Interactive Brokers (NASDAQ:IBKR) doesn’t seem like a natural idea for AI stocks to invest in. However, per its public profile, Interactive operates the largest electronic trading platform in the U.S. by number of daily average revenue trades. With so many moving pieces, the company needs digital intelligence to stay ahead.
It’s doing just that thanks in part to IBot, an AI protocol that provides access to a full range of information, trading tools, features, and account data. Whether you want to sell an option or check out your account balance, IBot gets you where you need to go quickly and efficiently.
Presently, Wall Street analysts peg IBKR as a consensus strong buy. This assessment breaks down as six buys, one hold, and importantly zero sells. Overall, the experts’ average price target lands at $105, implying 18% upside potential.
Truthfully, IBKR could use some work on its financials. Nevertheless, trading at a revenue multiple of only 1.76, Interactive is undervalued. Therefore, it’s one of the smart trades amid hyped AI stocks soaring.
Alibaba (BABA)
Quite frankly, those who want to buy AI stocks today but at a discount will have difficulty in the U.S. market. Amid the digital intelligence hype train, too many enterprises now command incredibly rich premiums. However, the same cannot be said about Alibaba (NYSE:BABA). A Chinese e-commerce juggernaut, Alibaba has invested heavily in cloud AI and data intelligence.
In addition, the company represents one of the top players in machine learning. Currently, Alibaba is working on an ML platform that allows quick modulation to meet the data-driven operational needs of its enterprise-level clients. Unsurprisingly, among 14 analysts, all but one of them rate BABA as a buy. The lone dissenting voice is a hold. Overall, the experts’ average price target lands at $142.71, implying over 50% upside potential. Further, the high-side target stands at $183, implying over 92% growth.
For those looking for AI stocks to invest in, it’s difficult to pass up Alibaba. Along with its growth trek and consistent profitability, the market prices shares at a forward multiple of 10.58. That’s lower than 74% of the competition.
JD.com (JD)
A juggernaut in China’s e-commerce arena, JD.com (NASDAQ:JD) might not spark confidence for those seeking AI stocks to invest in. Contrasting sharply with the fast-rising hype train, JD stock dropped nearly 34% in equity value since the beginning of this year. Fundamentally, the slower-than-expected recovery of China’s economy has clouded the company. Still, long-term investors might appreciate the discount.
Recently, JD.com joined China’s AI arms race with a large language model for enterprise use. And thanks to its core e-commerce business, JD is essentially a treasure trove of data. Of course, data – and gobs of it – represent the lifeblood of digital intelligence. To little shock, analysts peg JD as a consensus strong buy. This assessment breaks down as 11 buys, two holds, and no sells. Moreover, the average price target lands at $60.77, implying nearly 59% upside potential. The high-side target clocks in at $97, implying almost 154% growth.
Enticingly, JD features a strong long-term revenue growth rate along with stability in the balance sheet. Despite these attributes, JD is still undervalued, trading at a forward multiple of only 13.56.
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.
