Key Points
Microsoft, Nvidia, and Meta Platforms all look like great values.
Taiwan Semiconductor and Broadcom are experiencing massive growth due to the demand for AI chips.
If you've got $5,000 you've been waiting to invest, right now could be an excellent time to deploy it. Currently, artificial intelligence (AI) stocks that have huge upside potential are trading at relatively low valuations, and investors won't want to miss this opportunity.
I won't be surprised if several of these five stocks are up by 20% to 30% by the end of this year, but their upsides beyond 2026 are even greater.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
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Microsoft
Microsoft(NASDAQ: MSFT) has been unloved by the market recently. Although its business is delivering strong results, the stock is down by around 25% from its all-time high. From a price-to-earnings standpoint, the last time Microsoft's valuation was this cheap was during the marketwide sell-off in late 2022. The stock is even cheaper now than it was during the COVID-19 sell-off in March 2020.
MSFT PE Ratio data by YCharts.
Buying opportunities like this for Microsoft's stock don't come around that often.
Nvidia
Nvidia(NASDAQ: NVDA) finds itself in a similar boat. The company is doing nothing wrong and is projecting monster revenue growth over the next year because of the insatiable demand for AI computing hardware. Its graphics processing units (GPUs) remain the most popular parallel processors available, and with the AI hyperscalers spending hundreds of billions of dollars to build out their data center infrastructure, it's set to keep reaping the benefits. Despite this, Nvidia trades for a mere 22.2 times expected forward earnings.
For reference, the S&P 500 (SNPINDEX: ^GSPC) trades for 21.9 times forward earnings, so Nvidia barely trades at a premium. That's a bit absurd, and makes the stock appear undervalued today.
Meta Platforms
The market has a love-hate relationship with Meta Platforms(NASDAQ: META). Meta is the parent company of social media sites Facebook and Instagram, but investors aren't overly worried about that part of the business. What they are concerned about is the massive amount of money Meta is spending on AI, which hasn't delivered any returns on investment yet. While the verdict is still out about how high (if any) the returns from generative AI will be, Meta believes it needs to invest in this technology or risk becoming irrelevant.
Meta is down around 15% from its all-time high and trades for 21.9 times forward earnings -- the same valuation as the S&P 500.
Taiwan Semiconductor Manufacturing
Few companies are profiting as much from the AI infrastructure buildout as Taiwan Semiconductor Manufacturing(NYSE: TSM). It's the world's leading logic chip manufacturer and boasts many clients, among them Nvidia. Taiwan Semiconductor expects AI chip revenue to grow at a compound annual percentage rate in the mid-to-high 50s from 2024 to 2029.
As a neutral party in the AI buildout, Taiwan Semiconductor will keep profiting as long as more AI computing power continues to be needed -- an outcome that's nearly guaranteed based on the long-term spending plans of the hyperscalers.
Broadcom
While Nvidia supplies what are, hands down, the best general-purpose AI computing units, Broadcom(NASDAQ: AVGO) is a rising competitor. Instead of building flexible GPUs like Nvidia, Broadcom is partnering directly with hyperscalers to design application-specific integrated circuits (ASICs) -- computing units that are tailored to handle highly specific workloads. For systems that are expected to only encounter a limited variety of AI-related workloads over their entire lifespans, these chips can provide superior performance at a lower cost by sacrificing flexibility that they won't need anyway. Broadcom is seeing monster growth in this segment: In the company's fiscal 2026 Q1, its AI semiconductor revenue rose 106% year over year to $8.4 billion.
If you annualize that number, you get about $33.6 billion. However, by the end of 2027, the company projects that figure will triple to over $100 billion. That huge anticipated growth makes Broadcom an incredible stock to buy now.
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Keithen Drury has positions in Broadcom, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
