Nvidia, Alphabet and Micron trade at near‑value multiples, analysts say

Artificial intelligence (AI) stocks, leaders in this bull market over the past three years, weren't always cheap. In fact, during most of their time soaring, they were pretty expensive. Investors piled into AI stocks before the big wave of AI-driven earnings growth, and valuations climbed. These investors aimed to get in early on this technology that could revolutionize how the world operates and result in the revenue and profit of many companies exploding higher.

In more recent times, earnings of many AI companies have indeed surged, but at the same time, their stock prices have come down amid general market concerns and worries about the sustainability of AI spending.

As a result, certain compelling AI players are trading at bargain levels, even rivaling those of value stocks. The average forward price-to-earnings ratio for value stocks early this year was a little over 17, according to Siblis Research. The following three AI growth giants are trading close to that level or lower, making them look more like value stocks today. And considering that the long-term AI story continues to look bright, these players make excellent bargain buys right now.

Image source: Getty Images.

1. Nvidia

You might not expect a stock like Nvidia (NVDA +2.24%) to be dirt cheap. After all, the company has been driving the AI boom, furnishing customers with the graphics processing units (GPUs) that fuel crucial tasks. And thanks to the company's early presence in this market and focus on innovation, it's managed to keep its leading position.

Key Data Points

Meanwhile, Nvidia has broadened its products and services so that it offers a full portfolio to serve the AI customer. All of this has supercharged earnings growth, and we can see this in the latest quarter. The company's revenue and net income each rose in the triple digits to $96 billion and $59 billion, respectively.

Nvidia has seen its valuation tumble in recent months, with the stock now trading at 22x forward earnings estimates. That's down from more than 40x earlier this year. All of this makes Nvidia a buy that both growth and value investors may appreciate.

2. Alphabet

Alphabet (GOOG +0.70%) (GOOGL +0.77%) might be most familiar to you thanks to its Google Search business. And that business happens to be the company's major revenue driver, as it brings in billions of dollars in advertising revenue.

Key Data Points

But in recent years, Alphabet has been flexing its AI muscles too, developing its large language model, Gemini, and offering this and other AI products and services to its Google Cloud customers. The Cloud business, driven by AI demand, reported an 82% increase in revenue to more than $24 billion in the most recent quarter. And Gemini hit one billion monthly active users, making it Alphabet's fastest-growing product ever.

Right now, Alphabet trades for only 16x forward earnings estimates, down from around 30x late last year. This makes it cheaper than the average value stock.

3. Micron Technology

Micron Technology (MU +5.26%) is another monster stock in the AI space. When you think of powering AI, you may think of Nvidia's GPUs or other logic chips. But for key tasks like inference, or the thinking process AI agents go through to solve a problem, memory and storage chips are also critical tools. This is where Micron comes in, offering a variety of memory and storage solutions.

Key Data Points

And this has translated into explosive growth for Micron as well as incredible stock price performance. In the latest quarter, revenue advanced more than 300% to $41 billion, and this year Micron stock soared. The earnings growth is far from over, given the current memory shortage, and Micron has developed strategic customer agreements -- ensuring supply for customers and securing visibility into revenue growth for Micron.

Micron shares traded for 16x forward earnings just a few months ago, but today, this has dropped to only 6x, making this stock a fit for growth investors -- and even some value investors.