5 AI Stocks Cheaper than NVIDIA to Buy NOW

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I made the case last week for buying NVIDIA even at these prices but with the caveat that it was too expensive for this value investor. Shares will no doubt be higher in 10-years but only the most determined growth investor will have the nerves to hold on through what is likely a painful crash from bubble-territory. This week, I want to help you stay invested in the AI-theme even if it’s not in shares of the market darling NVDA with a valuation of 11 AI-related stocks.

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There is little doubt AI will revolutionize our lives and I don’t think you should avoid the theme just because the market darling is too expensive. That’s why I went looking through the AI stocks to find those trading less expensively than NVDA. I’ll highlight the top five below then show you the PEG ratio for all 14 AI stocks.

Understand two things though, first is that AI stocks are definitely in a bubble. That’s not saying the next 5-10 years these stocks won’t be higher but they could very easily be much lower over the next year. We can talk valuations all day but the fact is, when EVERYONE is talking about a theme, then it’s a good guess that stocks have approached bubble territory.

The solution to this, if you’re still going to be investing in AI stocks now, is to plan on regularly investing more in the stocks every few months. That way, if or when the bubble pops, you’ll be able to lower your average cost per share and still be in the stock when it takes off again.

The other thing you need to understand, something we talked about last week, is that the PEG ratio is very much dependent on those estimates for earnings growth…and Wall Street analysts making those estimates are just as prone to bubbles as the rest of us. Case in point, the average estimated earnings growth through 2025 for NVDA last week was 178% from $3.34 to $9.34 per share earnings. In one week, that average estimate has shot up to 210% growth with the forecast now for $10.37 per share earnings. What this means is, to use the PEG ratio, you have to be able to either trust estimates for earnings growth or use your own estimates.

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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through dividend stocks, investing and ways to make more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.
#stockstowatch #stockstobuy #nvdastock

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I've been eye balling a couple of Tech stocks and NVDA for a while now. I own no A.I stocks in my portfolio and I want to have that addition to my portfolio or am i too late? I currently have about 500k from an insurance payout and i don't want to mismanage it.

benjamindavidson

I came here to get an idea of how to trade utilizing A.I trading bot after hearing a guy on a podcast talk about the importance of A.I trading bot and how he made $660, 000 in 6 months from $50, 000. This video has helped to clarify a few things for me, but I'm still puzzled, I'm a rookie, and I'm open to suggestions.

Raymondjohn

AI Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are a lot of wealth transfer in this downtime if you know where to look.

bleshjjdnit

Inflation hits people a lot harder than a crashing stock or housing market as it directly affects people's cost of living that people immediately feel the impact of. It's not surprising negative market sentiment is so high now. We really need help to survive in this Economy. The ETF/Equity market keeps swinging.

graceocean

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katelynncox

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minoritymindset

PLTR is my largest holding. Might be bias, but that's my king maker.

giffica

Hi Joseph,

maybe you could make a video about PEG Ratio... What are the correct growth rates to take into account? Do you use P/E (ttm), P/E (fwd), which EPS you take (Basic or Diluted) and how about growth? EBIT Growth, EBITDA Growth, EPS Growth and from which period? Yearly, TTM, Estimated? PEG is one of the most incorrect calculated ratio by many platorms.

Even you take an incorrect EPS for NVDA! NVDA has EPS (ttm) of $1.92. The EPS you took is not the EPS over the last 12 month it's the expected EPS for 2024. If you take the latest annual report of NVDA you come up with an EPS (year) of just $1.74. Your Estimated EPS of $3.34 where the those from one year ago.

Your see, EPS makes it so difficult to calculate a "correct" EPS:
$1.92 = EPS (ttm)
$1.74 = EPS (latest annual report)
$3.34 = EPS (est. one year ago)
$7.23 = EPS (average est. 2024)

And now we come to the growth rates. What's the best growth rates to take into account? In your video you compare estimated EPS of $9.67 with those from one year ago ($3.34) and you come up with a growth rate of 70%. Instead of taken $7.23 = EPS (average est. 2024) vs. $1.92 = EPS (ttm). Why you take those from last year? And actually last year ttm was $3.73.

With a stock price of $393 and EPS $1.92 of the the last trailing twelve months makes it to a P/E ratio of 204.68. If we calculate the following growth rates:
EPS Growth = 104% = EPS $7.23 vs. EPS $1.74 (est. vs. last annual report)
EPS Growth = 94% = EPS $7.23 vs. EPS $1.92 (est. vs ttm)
EPS Growth = 116% = EPS $7.23 vs. EPS $3.34 (est 2024 vs. one year ago)
EPS Growth = 70% = EPS $9.67 vs. EPS $3.34 (est 2025 vs. one year ago)

Applying the stock price of $393 you come to the following P/E Ratios:
P/E = 225 = $393 / $1.74 EPS (latest annual report)
P/E = 205 = $393 / $1.92 EPS (ttm)
P/E = 114 = $393 / $3.34 EPS (one year ago)
P/E = 54 = $393 / $7.23 EPS (est. 2024)
P/E = 40 = $393 / $9.67 EPS (est.2025)

Based on the calculated EPS Growth and P/E you would come up of those PEGs:
PEG = 2.18 = 205 / 94% (based on ttm)
PEG = 0.47 = 54 / 116% (based on est. EPS 2024)
PEG = 0.57 = 40 / 70% (based on est. EPS 2025)

You see how difficult it is to calculate the correct values (EPS, EPS Growth and P/E) to calcual the correct and accurate PEG.

Therefore it would be cool and much appreciated if you could make a separate and in-depth analysis about the PEG ration and it's calcualtion.

SyzorX

Are you buying AI stocks or do you think it's a bubble?

josephhogue

News Moving the Markets Today. * TMBR.. Up 80 % Today. Timber Pharma. * BFRG... Bullfrog AI News Release. Will the Index Close Green Today. ?

swaep

This is great as to how to do the math, I had no idea. You have a new subscriber 🎉

oniwabangroup

I don't know what you are calculating but it sure is confusing. For example Palantir. 0.06 is now and 0.25 is expected. You calculated that to be 104% growth... You should see right away that the math is completely wrong... The growth rate is 416, 67 %

quaterman

Do you watch any videos from the youtuber, the "Maverick of wallstreet?" He's another one of my favorite stock analyst, but he's counting on further downside in the market. Love to hear your thoughts

audieallen