Core Viewpoint - Investing in artificial intelligence (AI) remains a leading theme in the market, with significant upside potential for both facilitators and deployers of AI technology [1] Facilitators - Facilitators are companies that produce the hardware necessary for AI development, with Nvidia being the most prominent player due to its widely used graphics processing units (GPUs) [4] - Advanced Micro Devices (AMD) is a competitor in the GPU space, showing strong growth despite not having the same market dominance as Nvidia [4] - Broadcom is developing custom AI accelerators known as XPUs, which are designed for specific workloads and can outperform GPUs in certain tasks [5] - Taiwan Semiconductor Manufacturing Company (TSMC) is the leading contract chipmaker for AI chips, projecting a 45% compound annual growth rate in AI-related revenue over the next five years [6] - ASML Holding, the sole manufacturer of extreme ultraviolet (EUV) lithography machines, is expected to benefit from increased chip demand as AI technology grows [7] - The facilitators are currently experiencing significant financial benefits from AI investments, outperforming deployers in terms of immediate results [8] Deployers - Deployers are companies that are integrating AI into their products, with major players including Alphabet, Amazon, and Meta Platforms, all investing billions to enhance their AI capabilities [9] - Alphabet and Amazon also operate large cloud computing businesses, providing essential computing resources for AI development [10] - Although these deployers are heavily investing in AI, they are only beginning to see incremental improvements in their financials, with potential for significant growth as AI enhances workforce efficiency [11] - Other notable companies integrating AI into their products include SentinelOne, which offers AI-driven cybersecurity solutions, and Adobe, which has embraced generative AI trends [12] - Adobe has continued to grow earnings despite concerns about disruption from generative AI, while SentinelOne reported a 23% revenue increase in the first quarter, highlighting its strong performance in cybersecurity [13] - The deployers are expected to experience substantial growth in the coming years as their AI investments mature [14]

Core Viewpoint - The artificial intelligence (AI) arms race is expected to disrupt some companies while benefiting others, with Adobe positioned to thrive rather than be replaced by AI [1] Group 1: Adobe's Market Position - Adobe has maintained its market position against generative AI, embracing it with the launch of Firefly AI, which has significantly increased its subscriber base by 30% quarter over quarter [3] - The company's suite of digital media design products remains the industry standard, indicating strong global demand [3] Group 2: Financial Performance - In fiscal Q2 2025, Adobe's revenue increased by 11% year over year, while earnings per share rose by 13%, from $3.50 to $3.95, outperforming the broader market's long-term average return rate of 10% [4] - Analysts project Adobe will achieve 9.5% revenue growth and 12.5% earnings-per-share growth in fiscal 2026, indicating steady growth potential [8] Group 3: Valuation and Investment Opportunity - Adobe's stock is currently trading at a low valuation of 18.4 times forward earnings, compared to the S&P 500's average of 22.9, suggesting it is undervalued [6] - The company generates substantial cash flow, allowing for share repurchases, making it an attractive buy-and-hold investment for those seeking steady growth rather than explosive returns [9] Group 4: Future Outlook - Adobe is expected to incrementally outgrow the market each year, making it a suitable investment for those looking to balance higher-risk stocks in their portfolio [5][8] - The potential risk of losing market share to a digital media startup exists, but currently, Adobe is not facing this threat, reinforcing its status as a strong investment [10]

"Dirt cheap" and artificial intelligence (AI) aren't typically mentioned in the same sentence. There's a preconceived notion that many of the AI stocks in the market are quite expensive, which is, for the most part, a fair assessment. However, there are still plenty of dirt cheap stocks that look like screaming buys in the AI space. Two of them are Alphabet (GOOG -1.44%) (GOOGL -1.59%) and Adobe (ADBE -2.93%), and each looks like an incredible buy right now. Why are these two dirt cheap? I consider both of ...

Core Viewpoint - The article discusses three stocks—Taiwan Semiconductor Manufacturing (TSM), Alphabet, and Adobe—that are currently undervalued compared to the broader market, suggesting they present strong buying opportunities despite recent sell-offs [2][5][11]. Valuation Comparison - All three stocks have lower forward price-to-earnings (P/E) ratios than the S&P 500, which is currently trading at 21 times forward earnings, while none of the three exceeds 20 [3][4]. - The market's slight premium on the S&P 500 indicates expectations of slower growth for these companies, which the article argues is a misconception [5]. Company-Specific Insights - **Taiwan Semiconductor Manufacturing (TSM)**: Expected to grow revenue at nearly 20% compound annual growth rate over the next five years, significantly outpacing the market's typical 10% growth [6][7]. - **Alphabet**: Anticipated to achieve 11% revenue growth in 2025 and 2026, with earnings per share (EPS) growth projected at 12% and 14% for the same years, respectively [8]. - **Adobe**: Despite being perceived as vulnerable to AI disruption, it reported a 10% year-over-year revenue increase in its fiscal 2025's first quarter. The company is also executing an aggressive buyback program, repurchasing 7 million shares, which could enhance EPS growth [9][10]. Investment Opportunity - The article concludes that while these companies may not be the fastest-growing stocks, they have strong potential to outperform the market, making them attractive value plays at their current prices [11].