The AI boom has been the dominant narrative in the stock market for much of 2024, with industry leader Nvidia (NVDA) capturing most of the attention and capital. However, as Nvidia’s valuation reaches stratospheric levels, savvy investors are beginning to look elsewhere for AI-related opportunities. This shift comes at a crucial time, as the broader market shows signs of rotation away from the “Magnificent Seven” stocks that have led the bull market thus far.
Recent data indicates that the S&P 500 Equal Weight Index has reached new all-time highs, suggesting that market breadth is improving. This trend, coupled with the expected interest rate cuts by the Federal Reserve, creates a favorable environment for previously overlooked AI stocks to shine. As Eric Fry notes in his recent article, “Wall Street is not yet pricing in the real impact of AGI, so [many AI-related] stocks are way underpriced across the board.”
In this context, identifying undervalued AI stocks beyond Nvidia becomes not just an opportunity for contrarian investors, but a necessity for those seeking to capitalize on the next phase of the AI revolution. Let’s explore three compelling options that our network of analysts are discussing.
Intel (INTC): The Sleeping Giant Awakens in AI
Intel, once the undisputed leader in semiconductor manufacturing, has faced challenges in recent years. However, recent developments suggest that the company might be on the verge of a significant turnaround, particularly in the AI space.
Chris Johnson, in his recent analysis, expresses a bullish sentiment on Intel, stating, “Intel is set for another 30% run to my upgraded target price of $25.” This optimism is rooted in Intel’s potential restructuring and its efforts to regain competitiveness in the AI chip market.
Johnson’s article highlights the recent surge in Intel’s stock price following news of potential restructuring and activist investor involvement. He notes, “Today’s rally off the $20 level threatens to break above the stock’s top Bollinger Band. A move above the top Bollinger Band would trigger a volatility rally that is likely to carry the stock to its 50-day moving average.”
This technical analysis, combined with Intel’s fundamental potential in AI, makes it a compelling option for investors looking for undervalued AI plays. The company’s vast resources, established manufacturing capabilities, and renewed focus on AI could position it as a formidable competitor to Nvidia in the coming years.
Analyst Ratings
| Metric | Value |
|---|---|
| Consensus Rating | Overweight |
| Average Price Target | $63.41 |
| Potential Gain | 14.1% |
| Number of Ratings | 34 |
Analysts have a positive outlook on Intel Corporation, with a consensus rating of Overweight. The average price target of $63.41 implies a potential gain of 14.1% from the current price. The majority of analysts believe that Intel’s strong fundamentals, including its dominant position in the semiconductor industry and its growing presence in emerging markets, will drive future growth. This aligns well with our bullish stance on Intel’s potential in the AI space.
Dell Technologies (DELL): Critical AI Player Near Breakout
While not traditionally thought of as an AI company, Dell Technologies has emerged as a critical player in the AI infrastructure space. The company’s servers and storage solutions are essential components for businesses looking to implement AI technologies.
Chris Johnson provides insight into Dell’s potential, stating, “Dell is preparing to cross above its 50-day moving average, which has been in a bearish trend. A move above the $125.00 level is going to spark technical buying as the stock crosses above that important 50-day trendline.”
In his analysis, Johnson highlights Dell’s recent earnings beat and the company’s strong performance in its Infrastructure Solutions Group segment, which jumped 38% year-over-year. This growth is largely attributed to the booming demand for AI servers.
Dell’s position as a key supplier of AI infrastructure, combined with its relatively modest valuation compared to pure-play AI companies, makes it an attractive option for investors seeking exposure to the AI trend without the premium price tag of more hyped stocks.
Analyst Ratings
| Metric | Value |
|---|---|
| Consensus Rating | Overweight (4.33/5) |
| Average Price Target | $64.15 |
| Potential Gain | 15.1% |
| Number of Ratings | 24 |
Analysts have a positive outlook on DELL, with a consensus rating of Overweight, indicating a strong buy signal. The average price target of $64.15 suggests a potential gain of 15.1% from the current price. Most analysts believe that Dell’s strong fundamentals, including its leadership in the server market and its growth in the PC business, will drive the stock’s performance in the coming quarters. This bullish sentiment from analysts reinforces our view of Dell as a key player in the AI infrastructure space with significant upside potential.
Super Micro Computer (SMCI): High-Risk, High-Reward AI Pioneer
Super Micro Computer has been one of the most volatile stocks in the AI space, experiencing both dramatic rises and sharp pullbacks. Despite recent challenges, including a short-seller report and delayed financial filings, many analysts remain optimistic about the company’s long-term prospects in the AI market.
Chris Johnson notes in his recent analysis, “Numerous analysts have been quick to defend the AI company’s situation.” This sentiment reflects the underlying strength of Super Micro’s business model and its critical role in the AI hardware ecosystem.
Johnson’s article provides a balanced view of SMCI’s current situation, acknowledging the recent challenges while also highlighting the stock’s technical support levels. He observes, “For now, the stock has seen almost precision support at its 20-month moving average and the round-numbered $400 price level.”
While Super Micro Computer presents higher risk due to its recent volatility, it also offers potentially higher rewards. The company’s focus on high-performance, energy-efficient server solutions positions it well to capitalize on the growing demand for AI infrastructure. For investors with a higher risk tolerance, SMCI could represent a unique opportunity to invest in a company at the forefront of AI hardware innovation.
Analyst Ratings
| Metric | Value |
|---|---|
| Consensus Rating | Overweight |
| Average Price Target | $54.50 |
| Potential Gain | 24.1% |
| Number of Ratings | 6 |
Analysts have a positive outlook on Super Micro Computer, Inc., with a consensus rating of Overweight. The average price target of $54.50 suggests a potential gain of 24.1% from the current price. This indicates that analysts expect the stock to perform well in the future, despite recent volatility. The high potential gain projected by analysts aligns with our view of SMCI as a high-risk, high-reward play in the AI hardware space. However, it’s worth noting that the number of ratings is relatively low compared to larger companies, which could indicate less consensus in the market about SMCI’s prospects.
