2 Leading AI Stocks to Buy Now

The AI trade might have gotten a whole lot bumpier after rolling through big tech earnings season, but the boom still seems to be very much on the table. And while the trajectory could continue higher from here, investors should be ready for just a bit more turbulence.

Undoubtedly, it’s hard to tell exactly where we stand in the AI revolution. But instead of making non-stop comparisons to the dot-com bubble that inflated in the mid-to-late 1990s, only to blow up in spectacular fashion in 2000-01, I do think it makes sense to ask oneself where the relative value is in this market.

Whether that’s within non-tech corners, underappreciated areas of tech, or within the AI trade itself, I certainly wouldn’t bet against the names that don’t look all too bubbly right here. I’d argue that you don’t need to look too far within the AI trade to come across stocks that are nowhere near as overvalued and overhyped as the peak of the internet bubble.

Back in 1999, it wasn’t out of the ordinary to justify paying a 35 times price-to-sales (P/S) multiple for a stock, let alone 35 times price-to-earnings (P/E), which is pretty much the price of admission into the tech- and AI-heavy Nasdaq 100 index. Though things are getting historically frothy, I don’t think we’re at a point where it makes the most sense to sell out of tech, or, even more extreme, go short big tech, as Dr. Michael Burry of The Big Short fame has done with put options against Nvidia (NASDAQ:NVDA) and Palantir (NASDAQ:PLTR). 

In any case, this piece will look at two leading AI stocks that I think have a strong case for being fairly valued, or maybe even slightly cheap.

Nvidia

I have a ton of respect for Dr. Michael Burry. I think you have to for his magnificent call leading up to the 2008 housing crisis. Still, I think it’s a tremendously risky proposition to place a short bet against a company that many would dub the AI chip king, especially if we’re nowhere close to the end of the AI ballgame.

Undoubtedly, for a put on Nvidia to play out, you’d need to think we’re at the bottom of the ninth in this AI revolution. Not only that, but you’d also have to call a painful ending to this boom, which might not happen since not all booms end in a bust. In any case, I think it’s quite a stretch to think that we’re in the latter innings, rather than in the middle or even the first few innings.

Either way, I think corporate America is just scratching the surface of what’s possible with AI with regard to monetization. And if that’s the case, it could take a while longer for a short bet to make sense. In the meantime, I think the tough terrain Nvidia shares are moving through should be viewed as opportunities to go long. At 29.5 times forward P/E, shares don’t look to be in a bubble, especially if Rubin chips and the firm’s quantum solutions play out. As a leader in AI chips by a country mile, I’d not give up on the leading AI innovator quite yet, even if the rest of the year proves choppy.

Alphabet

Alphabet (NASDAQ:GOOG) is another name that’s front and center in this AI revolution. And like Nvidia, shares of Alphabet don’t look bubbly. In fact, they still look absurdly cheap, with shares trading at 26.5 times forward P/E. With momentum behind Gemini and a real shot at becoming a top dog in the language model space, it still makes no sense why the name trades at a market multiple (or at least close to it).

It’s painful to miss a melt-up in shares, but the latest upswing might be just the start, especially with all the AI-driven (literally with Waymo) catalysts on tap for 2026 and beyond. With more of a focus on privacy with its new Private AI Compute service, I think there’s a good chance that Google Cloud Platform could get a growth shot in the arm.

And while there are uncertainties surrounding the optimal life expectancy of AI chips being capitalized, I wouldn’t view Burry’s recent accusations of overestimating the useful life of AI chips as a smoking gun. Burry did highlight something incredibly notable, but I think any potential pull-forward in earnings as a result of extended depreciation, in my opinion, would be less impactful if the AI growth story does play out in the next few years.