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What Are the 3 Best Bargain Artificial Intelligence (AI) Stocks to Buy Right Now?
The Motley Foolยท 2025-07-15 09:45
Core Viewpoint - The current market presents opportunities to invest in quality AI stocks like Nvidia, ASML, and Amazon, which are perceived as undervalued compared to their historical valuations [1][12]. Nvidia - Nvidia's stock is trading at approximately 52.5 times operating cash flow, which appears high, but its five-year average cash-flow multiple is 55.1, indicating a more attractive valuation [3]. - The trailing P/E ratio for Nvidia is 53, while its five-year average P/E ratio is 70.2, suggesting that shares are currently priced attractively [4]. - Nvidia plays a crucial role in the AI industry by designing graphics processing units for data centers and holding stakes in various AI companies [5]. ASML - ASML is essential for the production of advanced semiconductors used in AI applications, providing EUV lithography systems that enable high-density microchip manufacturing [6][7]. - The trailing P/E ratio for ASML is 33.7, which may not seem like a bargain, but its five-year trailing earnings multiple is 40.8, making the current valuation more appealing [8]. Amazon - Amazon's stock has increased by 2.6% in 2025, lagging behind the S&P 500's 6.4% rise, but this underperformance may create a good entry point for new investors [9][10]. - Currently, Amazon's shares are priced at 36.7 times trailing earnings, significantly lower than its five-year average P/E of 64.1, indicating a discount [10]. - Amazon has extensive exposure to the AI industry through its cloud platform, AWS, and various AI tools, positioning it well for future growth [11]. Investment Opportunities - Despite initial perceptions of high valuations, Nvidia, ASML, and Amazon are available at discounts when considering their historical valuations, making them attractive options for investors seeking AI exposure [12]. - Among these, Nvidia is highlighted as the best choice for concentrated exposure to the growing AI field [13].