10 Undervalued Chip Stocks Near 52-Week Lows

1. Advanced Micro Devices (NASDAQ:AMD)

AMD has nearly halved from its 52-week highs and is hovering around its 52-week lows. AMD has always played second-fiddle to Intel. However, with Intel’s recent decline, the company has become a leader in CPU technology. It now has to fulfill the same role competing against Nvidia in GPUs. So far, the company isn’t doing a good job as the stock price shows.

Things could change as AI infrastructure costs become an issue for companies. Nvidia has the better technology at a much higher price tag. AMD makes weaker GPUs that are more cost-effective for small and medium tech companies. As a result, the total cost of ownership of AMD infrastructure for training AI models is quite low, which is why companies opt for its GPUs.

At current levels, the stock is undervalued. It may be true that the market is not confident in AMD’s ability to dent Nvidia’s market share but it doesn’t need to do that to gain a good chunk of future AI spending. Its GPU part of the business will continue to stay relevant as companies continue to set up cheaper training and inference clusters. Moreover, using AMD GPUs in combination with Nvidia GPUs is also something businesses can consider to bring down their total costs. At 24 times its forward earnings estimates, the stock is a steal.

AMD is 19th on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 107 hedge fund portfolios held AMD at the end of the third quarter which was 108 in the previous quarter. While we acknowledge the potential of AMD as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as AMD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.