It’s hard to tell just how long the AI boom will last. Even as headlines begin using the word “bubble,” I’m not convinced that a big chunk of the tech scene is due for a horrid collapse in value, especially if AI bets start producing a bit of return or, in the case of Nvidia (NASDAQ:NVDA), a massive return that exceeded estimates of many raging bulls on Wall Street.
At this juncture, it seems too risky to chase the hottest AI stocks after recent sizeable moves. At the same time, investors also stand to miss upside surges by timing their exits too prematurely in the companies that view the AI boom as a long-lived secular growth driver rather than a short-lived boost that’ll end in tears. There are risks on both sides, to the upside and downside.
In any case, the AI underdogs may be worth looking into if you seek value and long-term AI upside. Some of the following AI underdogs have also been (mostly) left out of the latest year-to-date rally.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) is an electric vehicle (EV) maker first and foremost, and the stock certainly seems to reflect such as auto deliveries roll sharply lower. That said, TSLA stock may have lost a bit of its tech premium amid the latest rampant sell-off.
Undoubtedly, Tesla can be a tough stock to value, given that it has several impressive innovations that could move the needle on growth in the long term. Indeed, fully autonomous vehicles and the rise of robotaxis may be seen as a potential “wild card” by many investors. However, self-driving capabilities are not where Tesla’s AI prowess ends.
The company’s Optimus Gen 2 robot has received praise from Elon Musk of late. Next year could be a big year for the humanoid robot as more of them find work at Tesla’s factories. As AI takes more of a physical form in the next 10 years, perhaps Tesla is best equipped to benefit.
Undoubtedly, incorporating humanoid robots could help reduce labor costs and allow the EV giant more flexibility to reduce EV costs to be more competitive with up-and-coming rivals in the U.S. and China. Are too many investors getting caught up in the auto dip and missing out on the longer-term AI-driven narrative? Time will tell.
Intel (INTC)
Intel (NASDAQ:INTC) stock certainly seems like more of a value trap than a cheap AI play that investors may have taken the wrong way. At writing, INTC stock is down close to 40% from its 52-week highs. With enthusiasm over Intel’s comeback all but evaporated, questions linger as to how the fallen chip stock can win back shareholders, many of whom may have gone for the likes of Nvidia. Why settle for an underdog when Nvidia, the world’s new largest company, looks virtually untouchable?
Undoubtedly, Intel needs more than just a turnaround plan. It needs to execute and prove that it has more than just a puncher’s chance to return to the conversation with today’s AI chip leaders. Arguably, Intel needs to punch well above estimates to give investors confidence in the firm’s AI footing.
Though CEO Pat Gelsinger is a wonderful manager, there’s concern that the market leaders, like Nvidia, are just moving way too fast, giving laggards next to no opportunity to play catch-up.
While Intel is being aggressive with spend (investors seem off-put by rising costs), the company still seems like the “biggest head-scratcher in tech,” as Wedbush Securities’ Dan Ives put it.
CrowdStrike (CRWD)
CrowdStrike (NASDAQ:CRWD) is a top-notch cybersecurity company that’s hovering close to all-time highs, just shy of $400 per share. Indeed, every major cyber threat that hits the headlines can be viewed as rallying fuel for cybersecurity stocks. As cyber threats grow even more dangerous with generative AI at their side, there has never been a worse time to cut back on cybersecurity-related spending.
Given the pace of AI innovation, I’d argue the cybersecurity industry has timely enough tailwinds to bring forth even more upside. Further, we’re probably entering an era where it’s no longer sufficient to go with just any cybersecurity firm. To maximize protection, firms will need modern cybersecurity firms that are firmly grounded in the AI age.
You need to know AI to be able to fight off AI, after all.
With Charlotte AI, generative AI for the good guys, CrowdStrike may have the means to take further market share as it leverages AI in a way to expand the gap with industry rivals. As Charlotte AI advances its impressive multi-AI architecture, I view Crowdstrike as having the means to charge more as enterprises strive to get the most advanced AI-leveraging cybersecurity platform possible to prevent the nightmarish kinds of breaches we’ve witnessed in recent years.
On the date of publication, Joey Frenette did not hold (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.
