The stock market is currently experiencing a significant shift in leadership. While the “Magnificent Seven” tech giants have dominated headlines and market performance for much of the year, recent trends suggest a broader market rally is underway. As Corey McLaughlin notes in his recent article, “The ‘S&P 493’ is back in the lead… The so-called ‘magnificent’ stocks have been – finally – underperforming the rest of their peers.”
This rotation presents an opportunity for investors to look beyond the obvious AI plays and consider companies that are poised to benefit from the AI boom but haven’t yet received the same level of attention or valuation. As the AI revolution continues to unfold, these undervalued companies could offer significant upside potential.
Moreover, with the Federal Reserve hinting at potential rate cuts in the near future, as discussed by Charles Sizemore in his recent analysis, we could see increased investment in growth-oriented tech stocks, including those positioned to benefit from AI advancements.
In this context, let’s explore two stocks that our network of experts believe are undervalued AI beneficiaries:
Intel Corporation (INTC): A Contrarian AI Play with Enormous Upside Potential
Chris Johnson, in his recent article, provides a cautiously optimistic view on Intel. He notes that the stock “remains in a long-term bear market trend with a near-term price target of $27.” However, Johnson also highlights recent positive developments, including potential restructuring plans and increased interest from activist investors.
Our Take
While Intel has faced challenges in recent years, losing ground to competitors in the chip market, the company’s renewed focus on AI and potential restructuring make it an intriguing contrarian play. Intel’s vast resources, established manufacturing capabilities, and recent efforts to catch up in the AI chip race position it as a potentially undervalued AI beneficiary.
The company’s recent announcement about exploring options to split its product and foundry units, as reported by Johnson, could unlock significant value. This move, combined with Intel’s ongoing investments in AI chip development, suggests that the company is serious about reclaiming its position as a leader in the semiconductor industry.
Investors should be aware that Intel’s turnaround will take time, and the stock may face near-term volatility. However, for those with a longer investment horizon, Intel’s current valuation could present an attractive entry point for exposure to the AI revolution.
Analyst Ratings
| Metric | Value |
| Consensus Rating | Overweight |
| Average Price Target | $63.44 |
| 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 $63.44 suggests a potential gain of 14.1% from the current price. Most analysts believe that Intel’s strong fundamentals, including its dominant position in the semiconductor industry, will drive growth in the coming quarters. This aligns with our view that Intel’s efforts in the AI space could pay off in the long term, making it an attractive option for patient investors.
Dell Technologies Inc. (DELL): On the Brink of a Major Breakout in AI Infrastructure
Chris Johnson, in the same article, presents a bullish case for Dell. He states, “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.”
Our Take
Dell’s position in the AI landscape is often overlooked, but the company’s server business is poised to be a significant beneficiary of the AI boom. As companies rush to build out AI infrastructure, Dell’s enterprise solutions, particularly its AI-optimized servers, are seeing increased demand.
This view is supported by Dell’s recent earnings report, which showed strong growth in its Infrastructure Solutions Group segment. As Johnson notes, this division, which includes the AI server business, jumped 38% year-over-year.
Furthermore, Dell’s strategic partnerships with AI leaders like NVIDIA position it well to capitalize on the growing demand for AI infrastructure. While Dell may not be developing AI chips itself, its role in providing the hardware backbone for AI applications makes it a compelling “pick and shovel” play in the AI gold rush.
The technical setup that Johnson describes suggests that Dell could be on the verge of a significant upward move. If the stock breaks above the $125 level, it could attract more investor attention and potentially lead to a revaluation of Dell’s AI potential.
Analyst Ratings
| Metric | Value |
| Consensus Rating | Overweight (Buy) |
| Average Price Target | $63.44 |
| Potential Gain | 14.1% |
| Number of Ratings | 22 |
Analysts are generally bullish on DELL, with a consensus rating of Overweight (Buy). The average price target of $63.44 suggests a potential gain of 14.1% from the current price. Many analysts believe that Dell’s strategic initiatives, including its focus on edge computing, 5G, and artificial intelligence, will drive long-term growth. Additionally, the company’s strong cash flow generation and dividend yield are viewed as attractive by some analysts. This positive sentiment from analysts reinforces our view that Dell is well-positioned to capitalize on the AI boom through its server and infrastructure solutions.
