The Motley Fool·2025-06-19 08:35Core Viewpoint - AI stocks are gaining attention on Wall Street, with rising valuations, but there are still undervalued opportunities in the tech sector, particularly in companies that align with value investing principles [1][2]. Group 1: Alphabet - Alphabet is a leader in AI, having prioritized it for over eight years and made significant advancements, including the acquisition of DeepMind and the launch of Google Gemini [4][5]. - The stock is currently trading at a price-to-earnings ratio of 20, which is over 20% lower than the S&P 500, indicating an attractive valuation [5]. - Despite regulatory pressures and competition from generative AI chatbots, Alphabet has maintained steady growth, with Google Cloud becoming profitable and overall competitive advantages intact [6][9]. Group 2: TSMC - Taiwan Semiconductor Manufacturing Company (TSMC) is the largest semiconductor manufacturer globally, producing chips for major companies like Apple and Nvidia, and holds over 50% of the third-party chip production market [10][11]. - TSMC has experienced significant growth, with Q1 revenue increasing by 35.3% year-over-year to $25.5 billion and net income rising 60% to $10.9 billion, showcasing its strong pricing power with an operating margin of 48.5% [12]. - The stock trades at a price-to-earnings ratio of 25.6, which is in line with the S&P 500, and TSMC is well-positioned for long-term growth due to its technological strength and diversification efforts [12][13].