Have $20,000? These AI Stocks Could Be Bargain Buys for 2024 and Beyond

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Have $20,000? These AI Stocks Could Be Bargain Buys for 2024 and Beyond

A surge in artificial intelligence (AI) last year led to a rally in the tech market. The Nasdaq-100 Technology Sector index has climbed 81% since the start of 2023, driven primarily by excitement over AI. While the bull run has benefited current investors, it has also raised the price of entry for new ones, as the stocks of many of the world’s leading tech giants are trading at a premium.

It can be difficult to figure out

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, but investors can start by looking at its price-to-earnings ratio (P/E) and comparing it to the P/E of competitors. The ratio is calculated by dividing a company’s stock price by its earnings per share, and lower is considered better.

AI superstar Nvidia’s (NASDAQ: NVDA) P/E sits at 56. With Advanced Micro Devices’ P/E at 181 and Intel’s at 96, Nvidia looks like a bargain. Meanwhile, Nvidia keeps succeeding with its majority market share in AI chips, and its stock looks like a no-brainer way to invest in AI right now.

And Nvidia isn’t the only compelling option. So, have $20,000 that you don’t need for anything in the short or medium term? Here are two AI stocks that look like bargain buys in 2024 and beyond.

1. Nvidia ($108 per share)

According to research group BIS research, the

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market saw spending of about $15 billion last year and will expand at a compound annual growth rate of 32% until at least 2028 — hitting $62 billion. GPUs are a crucial growth area in AI, with the chips necessary for training and running AI models. Meanwhile, fierce competition between various AI software giants means companies will require the latest and most powerful chips to keep up with their rivals, creating instant demand for newly released GPUs.

Nvidia has enjoyed this demand firsthand, with an estimated 90% market share in AI GPUs.

The company posted its second-quarter fiscal 2025 results on Aug. 28. Revenue increased 122% year over year, beating Wall Street expectations by just over $1 billion. Meanwhile, earnings per share came in $0.04 higher than analysts had forecast. The quarter benefited from consistent growth in AI GPU sales, with revenue in its data center segment popping 154%.

Furthermore, the chart below shows that Nvidia’s earnings could reach nearly $5.00 per share in two fiscal years. If the stock’s P/E stays near where it is, that would mean a much higher stock price in two years.

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NVDA EPS Estimates for 2 Fiscal Years Ahead Chart

2. Alphabet ($158 per share)

Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) has delivered impressive gains over the years, with its stock up 178% since 2019. Alphabet’s operating income and free cash flow have climbed 135% and 96% over the last five years.

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Popular services like

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,

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, Android, and Chrome have made Alphabet an invaluable resource to consumers and businesses worldwide. These platforms attract billions of users daily, providing the company with a lucrative tool for building a highly profitable digital advertising business. And now, the company has a similar opportunity in AI.

Advertising has spurred the company’s growth in recent years; in the most recent quarter, advertising accounted for nearly 80% of Alphabet’s revenue. The tech giant’s investment in AI is also promising as it employs an expansion strategy similar to what it used to succeed in advertising. Over the last year, the company has integrated AI into many of its services, using the technology, for example, to better track viewing trends on

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and recommend videos, create a more responsive

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Search, and add a range of generative AI features to Android.

Meanwhile, Alphabet has even ventured into AI hardware with its recently revealed

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Pixel 9 smartphone, likely to give Apple’s coming iPhone 16 a run for its money with its advanced generative features.

As you can see in the chart below, Alphabet stock is a bargain compared to its rivals when viewed on a P/E basis. The company’s P/E of 23 is a low on this list. An investment in Alphabet could offer big gains over the long term.

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AMZN PE Ratio Chart

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 

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for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $661,779!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

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*Stock Advisor returns as of September 3, 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an

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subsidiary, is a member of The Motley Fool’s board of directors.

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has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet,

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, Apple,

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, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2026 $395 calls on

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, short January 2026 $405 calls on

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, and short November 2024 $24 calls on Intel. The Motley Fool has a

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.

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was originally published by The Motley Fool

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#Stocks #Bargain #Buys

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