The AI revolution is in full swing, with the “Magnificent Seven” tech giants leading the charge. However, as we’ve seen in recent market trends, there’s a growing appetite for diversification beyond these mega-cap stocks. According to Corey McLaughlin of Stansberry Research, “Since July 10, [the Magnificent Seven stocks] are down around 12%. The S&P 500 is just about even.” This divergence suggests that investors are seeking opportunities in the broader market, particularly in AI-adjacent sectors.
The recent earnings reports from companies like Nvidia have shown that while AI demand remains robust, the market is becoming more discerning about valuations and growth prospects. This creates an opening for lesser-known AI players to step into the spotlight. As the AI ecosystem expands beyond the tech giants, investors have a unique opportunity to capitalize on the next wave of innovation.
Let’s explore three promising AI stocks that are flying under the radar of many investors, but catching the attention of our network of expert analysts.
1. Intel (INTC)
Transformative Split May Skyrocket Stock!
Intel, once the undisputed leader in semiconductor manufacturing, has faced significant challenges in recent years. However, Chris Johnson of Money Morning sees potential for a major turnaround. In his recent article, “Three Stocks: Super Micro Computer, Intel, and Ulta Beauty”, Johnson highlights a significant development:
This potential restructuring could be a game-changer for Intel, allowing it to better compete in the AI chip market. The company’s recent rally, with shares trading 7% higher, suggests that investors are starting to recognize Intel’s potential in the AI space.
While Intel has lagged behind competitors like Nvidia in AI-specific chips, its vast resources and manufacturing capabilities position it well for a comeback. The company’s investments in AI research and development, coupled with its plans to expand chip manufacturing in the US, make it a compelling long-term play in the AI sector.
Investors should note that Intel remains in a long-term bear market trend, according to Johnson. However, the recent positive momentum and potential restructuring could mark the beginning of a significant turnaround. With a near-term price target of $27, Intel offers an attractive entry point for investors looking to capitalize on its AI potential.
Analyst Ratings
Intel has a mixed outlook from analysts:
- Technical Events: Short-term outlook is very bullish, but intermediate and long-term outlooks are bearish.
- Recommendation: Hold, with a target price of $42.00.
- Valuation: Considered undervalued with a 39% discount.
Analysts highlight Intel’s strong market position but acknowledge challenges in execution and competition. The potential split of the company’s assets could be a catalyst for future growth.
2. Super Micro Computer (SMCI)
Positioned for AI Infrastructure Boom!
Super Micro Computer may not be a household name like Nvidia, but it’s playing a crucial role in the AI revolution. The company specializes in high-performance server solutions, which are essential for running AI workloads. Chris Johnson’s analysis in the same article offers a nuanced view of SMCI’s current situation:
This technical resilience is particularly noteworthy given the recent volatility SMCI has experienced. The stock was hit by a short-seller report and news of a delayed SEC filing, which caused a significant drop. However, Johnson notes that numerous analysts have been quick to defend the company’s situation.
Super Micro Computer’s focus on energy-efficient and high-density server solutions makes it well-positioned to benefit from the growing demand for AI infrastructure. As companies across industries ramp up their AI capabilities, SMCI’s specialized offerings could see increased demand.
Investors should approach SMCI with cautious optimism. While the stock has shown technical strength by bouncing off its 20-month moving average, it’s crucial to monitor the resolution of its current filing delay and any potential accounting issues. The $400 price level is a key support to watch, as a break below could trigger further selling pressure.
Analyst Ratings
Super Micro Computer has a generally positive outlook:
- Technical Events: Short-term outlook is very bearish, but long-term outlook is bullish.
- Recommendation: Buy, with a target price of $1000.00.
- Valuation: Considered undervalued with an 83% discount.
Analysts praise SMCI’s strong position in the AI server market but caution about recent volatility and accounting concerns. The company’s growth potential in AI infrastructure is seen as a significant opportunity.
3. Dell Technologies (DELL)
Riding the AI Server Wave
Dell Technologies might seem like an unlikely AI play, but the company is making significant strides in the AI server market. Matt Clark of Money & Markets provides compelling insights into Dell’s AI potential in his article “Innovation With a Side of Bacon (NVDA Stock Journey)”:
This explosive growth in Dell’s AI-related business segment underscores the company’s successful pivot towards high-growth areas of technology. As more enterprises adopt AI technologies, Dell’s established presence in the enterprise IT market gives it a significant advantage in capturing this demand.
Dell’s strong performance in the AI server space is particularly noteworthy given the broader context of the AI boom. While much attention has been focused on chipmakers like Nvidia, Dell’s success highlights the importance of the entire AI infrastructure stack, including servers and storage solutions.
Investors should consider Dell as a more stable way to gain exposure to the AI trend. The company’s diversified business model, which includes personal computers and other IT solutions, provides a buffer against the volatility often seen in pure-play AI stocks. With Dell’s AI-related revenues showing strong growth, the stock offers an attractive blend of stability and AI upside potential.
Analyst Ratings
Dell Technologies has a positive outlook from analysts:
- Technical Events: Short-term and intermediate-term outlooks are bearish, but long-term outlook is bullish.
- Recommendation: Buy, with a target price of $150.00.
- Valuation: Considered overvalued with a -6% premium.
Analysts highlight Dell’s strong position in the AI server market and its potential to benefit from the ongoing AI boom. The company’s diversified business model is seen as a strength in capturing AI-related growth.