Summary of "7 Insanely Cheap AI Stocks to Buy Now"

Summary of Finance-Specific Content from “7 Insanely Cheap AI Stocks to Buy Now”

Key AI Stocks & Tickers Mentioned

Micron Technologies (MU)
- Market Cap: $181 billion
- Shares up 54% since July recommendation
- 22% annualized revenue growth through 2026
- AI-driven demand for High Bandwidth Memory (HBM)
- August Q4 guidance raised: +$0.5 billion revenue outlook, +2% gross profitability, EPS increased
Symbotic (SYM)
- Shares up 80% since July
- AI-driven warehouse logistics and robotics
- Currently expensive; waiting for pullback before adding shares
Upstart Holdings (UPST)
- Shares +20% since July, then crashed in August
- Auto loan delinquencies increased in Q2
- Issued $600 million convertible debt due 2032
- Revenue expected to hit $1 billion (66% YoY growth), 20% earnings margin
- 45% annualized growth, valuation under 0.2x sales (adjusted)
- AI reduces customer acquisition cost by 50%, onboarding costs by 66%, enables lower loan rates
EPAM Systems (EPAM)
- Market Cap: $10 billion
- Revenue +18% YoY, full-year outlook up to 15% growth
- Price-to-sales under 1.8x
- Focus on AI-driven software development and enterprise IT services ($2.1 trillion market)
Sprout Social (SPT)
- Operating income nearly doubled Q2 YoY but margins fell QoQ
- AI integration in social media management but limited scale (30,000 users)
- Considered a weaker AI play, possible growth slowdown
Dell Technologies (DELL)
- Shares up 15% since July
- Positioned in x86 servers, progress in higher-performance AI servers (PowerEdge line)
- Lags HPE and Super Micro in AI server space
Hewlett Packard Enterprise (HPE)
- Shares up 20% since July
- Strong competitor in high-performance AI servers
- Partnerships with Nvidia, liquid cooling tech, Juniper Networks acquisition
- Activist investor Elliott Management involvement
- Stronger revenue growth than Dell, benefits from PC sales rebound
Super Micro Computer (SMCI)
- Shares flat since July, best AI deal in the list
- 22% market share in high-performance AI servers
- Forecasted $40 billion sales next year
- 34% annualized sales growth
- Stock up 180% from lows (~$17/share) after debunked accounting manipulation accusations
- Rated outperform by Raymond James, near pure-play AI stock
Other Notable Stocks/Sectors:
- Amazon (AMZN): 3.6x sales, 10% sales growth, cloud computing & AI chip development
- Meta (META): 11.5x sales, adjusted 65x sales with 17% growth
- Alphabet (GOOGL): Large market cap, expensive valuation
- Nvidia (NVDA): 33x sales, 73x adjusted sales, 45% growth
- Marvell Technology (MRVL): 43x adjusted sales, strong in data center accelerators
- The Trade Desk (TTD): AI in adtech, favorable value ahead of Q3 earnings
- IBM: 3.9x sales, AI and quantum computing potential
- Palo Alto Networks (PANW): Cybersecurity, expensive but growing theme
- CrowdStrike Holdings (CRWD): 30x sales, cybersecurity leader
- SoundHound AI (SOUN): Bought at $4, now $16, long-term AI play
- Palantir (PLTR): ~150x sales, expensive despite 40% growth
- Intel (INTC): Expensive on turnaround hopes

Methodology / Framework for Stock Selection

Compile a comprehensive list of AI-related stocks
Use Yahoo Finance to obtain market capitalization (market cap)
Evaluate valuation using Price-to-Sales (P/S) ratio, a preferred metric for growth stocks
Adjust P/S valuation by factoring in forecasted sales growth (analyst estimates) to get an adjusted price-to-sales ratio
Compare adjusted valuations to identify undervalued AI stocks
Focus on companies with strong revenue growth, reasonable valuations, and clear AI-related business drivers
Follow the AI supply chain from semiconductor chips (Nvidia, AMD, Broadcom, Marvell) to servers (Dell, HPE, SMCI) to infrastructure and applications
Avoid largest mega caps as they tend to be more expensive and less attractive value-wise
Monitor operational metrics such as margins, revenue guidance, and growth outlooks for signs of strength or weakness
Consider recent news, e.g., convertible debt issuance, delinquencies, activist investors, and product launches
Track portfolio performance and adjust holdings accordingly

Key Numbers & Timelines

Micron: 22% annualized growth through 2026, Q4 guidance increased by $0.5B revenue and +2% gross profit
Upstart: $1B revenue expected in 2023 (66% growth), 20% margin, $600M convertible debt due 2032
EPAM: Revenue +18% YoY, 15% growth outlook for full year
SMCI: $40B forecasted sales next year, 34% annualized sales growth
Symbotic: 80% share price gain since July
AIQ ETF: +14% return over 3 months vs. 27% average for selected AI stocks
AMD example: 10x P/S, 28% sales growth this year, 21% next year, adjusted valuation 41x P/S
Amazon: 3.6x sales, 10% growth
Meta: 11.5x sales, 17% growth
Nvidia: 33x sales, 45% growth

Explicit Recommendations & Cautions

Strong buys: Micron, SMCI, and HPE for AI infrastructure exposure
Symbotic: Promising but currently expensive; wait for pullback
Upstart: Attractive despite recent share drop and convertible debt issuance due to strong growth and AI-driven cost advantages
Sprout Social: Weaker AI play with margin compression and limited scale; consider passing for now
Avoid chasing lowest valuations blindly; consider growth potential and business fundamentals
Large mega caps like Amazon, Meta, Alphabet, Nvidia are expensive relative to growth but still solid long-term plays
Cybersecurity stocks (CrowdStrike, Palo Alto Networks) are expensive but part of a strong growth theme
Palantir and Intel are too expensive given current multiples and growth prospects
SMCI is a near pure-play AI stock with strong growth and undervaluation, despite past accounting concerns now resolved
Use adjusted price-to-sales valuation to find the best value AI stocks rather than raw multiples

Disclaimers

No explicit financial advice disclaimer stated, but recommendations are presented as personal opinions and analysis. Emphasis on doing deep analysis and valuation adjustment before investing. Encouragement to join the presenter’s social investing app for portfolio insights and community engagement.

Presenter / Source

Joseph Hog, host of the “Bow Tie Nation” YouTube channel
Mentions of Raymond James analyst rating for SMCI
References to Yahoo Finance data and analyst forecasts for valuation and growth metrics

Summary

Joseph Hog updates his AI stock picks, highlighting seven undervalued AI-related stocks with strong growth potential and attractive adjusted valuations. He focuses on companies benefiting from the AI infrastructure buildout, particularly in memory (Micron), servers (HPE, SMCI, Dell), and AI-driven software and lending platforms (Upstart, EPAM). The methodology uses price-to-sales ratios adjusted for forecasted growth to identify bargains amid a booming AI investment theme. While mega caps like Amazon and Nvidia are expensive, they remain strong long-term plays. Caution is advised on lower-scale or margin-compressed names like Sprout Social. SMCI stands out as a near pure-play AI stock with strong growth and deep value, making it a top recommendation.