Undervalued and Profitable: 2 Artificial Intelligence (AI) Stocks to Buy and Hold

Group 1: AI Market Overview - Artificial intelligence (AI) is a significant growth driver for technology stocks, with companies offering AI hardware and software solutions experiencing healthy business growth and valuations [2] - Finding attractively valued AI stocks is challenging due to the high valuations of tech stocks driven by AI [2] Group 2: Meta Platforms - Meta Platforms utilizes AI to enhance user engagement and provides advertisers with various AI tools, leading to improved monetization and growth in the company's bottom line [5][10] - With a daily active user base of nearly 3.5 billion, Meta's AI recommendation tools encourage users to spend more time on the platform, enhancing ad performance [7] - Meta reported a 5% increase in AI-related ad conversions on Instagram and a 3% improvement on Facebook, with a 9% year-over-year increase in the average price per ad [8][9] - For every dollar spent by advertisers using Meta's AI tools, they receive a return of $4.52, positioning Meta to capture a larger share of the digital advertising market, which is expected to grow at an annual rate of 15% through 2030 [10] - Meta's current trading at 28 times earnings is a discount compared to the Nasdaq-100 index's earnings multiple of 33.6, making it an attractive investment opportunity [11] Group 3: DigitalOcean - DigitalOcean is a cloud computing services provider benefiting from the growing adoption of AI, targeting early-stage technology companies and developers [12] - The company offers a full-stack AI-focused solution by renting out GPUs for AI model training and inference, positioning itself in a rapidly growing market [13] - The cloud AI market is projected to grow over 7 times between 2025 and 2030, generating over $647 billion in annual revenue by the end of the decade [14] - DigitalOcean's second-quarter results showed healthy revenue and earnings growth, with an updated earnings per share forecast for 2025 indicating an 8% potential increase from the previous year [15][16] - The company reported a 17 times year-over-year increase in remaining performance obligations (RPO) to $53 million, indicating strong revenue visibility and a shift towards commitment-based agreements [17] - DigitalOcean trades at 15.7 times forward earnings, suggesting significant upside potential as its growth accelerates [18]