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It's not too late to buy AI stocks if you know where to look.
Artificial intelligence (AI) stocks have experienced a significant rally recently. As the market acknowledges the substantial value these companies create, their rapidly increasing revenues are fueling investor excitement for future prospects. Despite this upward trend, it may be surprising to some investors that certain tech stocks in the AI sector still appear to be undervalued. This article highlights two particular stocks that seem increasingly well-positioned to offer considerable value for investment.
It might be unexpected to consider Nvidia a "cheap AI stock," especially after its remarkable surge of over 1,600% from its 2022 low, establishing it as a dominant force and a highly sought-after player in the AI accelerator market. However, Nvidia trades at a P/E ratio of just 41. While this is above the S&P 500 average of 31, it is considered quite reasonable when juxtaposed with its impressive growth figures. In fiscal 2026 (ending January 25), Nvidia reported $216 billion in revenue, marking a 65% increase year-over-year. Despite the high costs associated with meeting immense demand, the company still achieved $120 billion in net income, also a 65% increase over the same period. The seemingly low valuation relative to its income growth is likely influenced by Nvidia's enormous scale. Its unprecedented growth has propelled its market value to $4.9 trillion, surpassing all other publicly traded companies. This significant size implies that a doubling of its stock value would result in a $9.8 trillion market capitalization, a figure that presents a psychological barrier, as no company has yet reached the $6 trillion mark. Consequently, another 1,600% increase in stock price is improbable in the near term. Nevertheless, maintaining a 65% income growth suggests that Nvidia is poised to continue outperforming the broader market considerably. This sustained performance could attract more risk-averse investors, even as aggressive growth investors seek opportunities for higher, albeit riskier, returns elsewhere. Ultimately, for investors seeking market-beating returns within the AI sector at a relatively modest valuation, Nvidia continues to present an incredible AI bargain.
CoreWeave, with a market capitalization of $61 billion, is considerably smaller than Nvidia. Despite experiencing a significant pullback post-IPO, its stock has rebounded by more than 60% this year. CoreWeave differentiates itself from traditional cloud providers like Amazon's AWS or Microsoft's Azure by specifically designing its cloud infrastructure for AI workloads. This specialization provides CoreWeave and its 'neocloud' counterparts a distinct competitive edge over larger, more established players. In terms of valuation, CoreWeave's stock is relatively inexpensive. As a currently unprofitable company, it lacks a P/E ratio. However, its price-to-sales (P/S) ratio stands just under 10, which is significantly cheaper compared to its neocloud competitor, Nebius, which trades at 73 times sales. It is important to note that CoreWeave's low valuation is not without reason. By the end of 2025, its book value of $3.3 billion was considerably less than its $21.4 billion debt, accumulated to finance the massive demand for its AI-specific cloud infrastructure. Customer demand is extraordinarily high, with CoreWeave reporting a backlog of $66.8 billion at the close of last year. Fulfilling these obligations will take time; although the company generated $5.1 billion in revenue in 2025 (a 168% increase from 2024), the costs associated with meeting this demand led to a $1.22 billion loss that year, significantly higher than the $937 million loss in 2024. This financial situation undeniably renders CoreWeave a riskier investment than Nvidia. Should it fail to meet market and customer expectations, its stock could face severe repercussions. Conversely, its current 10 P/S ratio positions CoreWeave for substantial growth if it can improve its financial health and eventually achieve profitability, potentially making it a worthwhile high-risk investment.
Before making an investment decision regarding Nvidia, it is important to consider additional perspectives. The Motley Fool Stock Advisor analyst team recently identified what they believe to be the 10 best stocks for investors to buy now; notably, Nvidia was not among them. The selected 10 stocks are projected to deliver substantial returns in the coming years. For context, consider past performance: an investment of $1,000 in Netflix when it was recommended on December 17, 2004, would now be worth $498,522. Similarly, a $1,000 investment in Nvidia on April 15, 2005, would have grown to $1,276,807. It should be noted that Stock Advisor’s overall average return stands at 983%, significantly outperforming the S&P 500's 200%. For those interested in discovering the latest top 10 investment recommendations, they are available through Stock Advisor, offering access to an investing community for individual investors. *Stock Advisor returns are as of April 26, 2026. Will Healy has positions in CoreWeave. The Motley Fool holds positions in and recommends Amazon, Microsoft, and Nvidia. The Motley Fool adheres to a disclosure policy. This article was originally published by The Motley Fool.