These AI Stocks Don't Get Enough Attention

Beyond the "Magnificent Seven," Applied Materials (AMAT) and Dell Technologies (DELL) are highlighted as compelling, undervalued AI investment opportunities. Applied Materials, a semiconductor equipment maker, has seen a 40% surge in six months and trades at 22.9x forward P/E, positioned to benefit from foundry expansion and easing US-China tensions. Dell Technologies, up 22% YTD and trading at 13.1x forward P/E, is poised for an AI-driven data center refresh and PC upgrade cycle, with Piper Sandler initiating an overweight rating citing its broad AI infrastructure exposure. Both companies offer AI growth at a perceived value, representing opportunities outside the heavily-covered mega-caps.

Analysis

The article highlights Applied Materials (AMAT) and Dell Technologies (DELL) as compelling, undervalued investment opportunities within the broader Artificial Intelligence (AI) sector, moving beyond the heavily-covered 'Magnificent Seven.' Both companies are presented as offering significant AI growth potential at attractive valuations, with AMAT having surged 40% in six months and DELL gaining 22% year-to-date, aligning with the Nasdaq 100. The overall sentiment surrounding these selections is strongly positive and bullish.

Applied Materials, a critical semiconductor equipment maker, is strategically positioned to benefit from increasing demand for foundry capacity, despite its stock still trading 8% below summer 2024 highs. The firm's workforce optimization, including 1,400 job cuts, is framed as a strategic move amid automation shifts, enhancing operational efficiency. Trading at 22.9 times forward price-to-earnings (P/E), AMAT is identified as a relative value bet, particularly with easing US-China tensions.

Dell Technologies is presented as an underrated AI play, poised for growth from AI tailwinds and an impending PC upgrade cycle. Piper Sandler initiated an 'overweight' rating, citing data center refresh and PC strength, underscoring Dell's broad exposure to AI infrastructure beyond hyperscalers. With a forward P/E of 13.1 times, Dell is considered a bargain at under $145 per share, offering a complementary AI investment opportunity.

Key Decisions for Investors

• Investors should consider initiating or increasing exposure to Applied Materials (AMAT) and Dell Technologies (DELL) as potentially undervalued AI plays outside of mega-cap tech.
• Monitor AMAT's performance in the semiconductor equipment cycle and the impact of easing geopolitical tensions on its outlook.
• Evaluate DELL's progress in capturing AI data center infrastructure spend and the timing of the anticipated PC upgrade cycle.