The Cheapest AI Stocks Right Now

追加: 2026-05-15

[00:00:02]This is the value investor podcast with Tracy  Reinick. All things value all the time. Welcome back value investors. So, I had a whole show  planned for today where I was running a bunch of screens, you know, obviously value screens,  trying to find value stocks that are in the redhot AI area because even as value investors, we still  want to be in this trade. And I do encourage all value investors to be in it. But is there value or  do we just have to say oh we're going to be growth investors right now in this in this area? uh which  I have talked about in the past that sometimes value investors don't have to be 100% in you know  the classic value type stocks with a PE under 15 and all of that but that you can find value  components in some stocks but we don't want to overpay for our companies either even in a red-hot  type of environment like we're having with AI So, what's a value investor to do? Um, I took it upon  myself. I threw out the other show I was going to do looking around in these various screens for AI  stocks. Those were, as I said, all value screens and used things like price to sales ratio to find  the value. It did have a growth component. Um, I looked at peg screens to try to see if I could  find some AI stocks using the peg, but really I I could not. Some that I thought maybe this might  be one. And I looked at a lot of companies that I haven't looked at before thinking they might  be hidden AI stocks because we're finding a lot of those now. the old economy stocks that are now  involved in building out the data centers in some way, you know, especially on the power generation  side. But this it just wasn't happening. So, I decided to, you know, rewrite what I was covering  today and to just look at the well-known AI stocks to see if there's any value there and to come up  with the cheapest AI stocks on a fundamental basis that us value investors could still realistically  get in and we're not like, "Oh, this is okay. It's not that expensive." Um, but it still is hard. So  things have been stretched even though earnings are on the rise. And with value investing, it does  depend on what kind of fundamentals you're looking at. If we're using PE, it's a little bit easier  to find uh cheaper AI stocks. Again, none of these are dirt cheap or, you know, screaming values, but  some have some interesting PE ratios. On the price to sales, that's going to be a lot more difficult  uh because those sales are more expensive now. So, we are going to pay up for the sales. uh PEG.  Like I said, I've run some of those screens and I wasn't finding what I wanted to find in the PEG  either because remember the PEG has to be one or less. And even with the earnings on the rise,  the prices on these stocks have risen too. So, we're not really getting that dirt cheap  peg, although there are a few exceptions.

[00:03:48]So we are going to talk about at least one that  does have the value peg. Um but otherwise it is more difficult now and we are kind of waiting for  a pullback and what I tell the investors all the time in the Zach's value investor portfolio which  has several AI stocks the AI infrastructure type stocks and they've had huge runs. The earnings  are on the rise, but they're no longer even just semiexpensive. They are very expensive here. But  what I always tell them is that there's always been pullbacks since 2023 when the AI revolution  took off. All of these stocks, including Nvidia, Nvidia just went sideways for the last six  to seven months. There's always chances to get a stock a little bit cheaper. Um, again,  you're probably not going to get it dirt cheap, but you will get pullbacks. Pullbacks are  healthy. I get nervous when we don't see the 5 to 10% pullback in these redhot stocks.  So, we will get one again. Even though I know many of you have fear of missing out, it  pays to be patient and you could have been uh buying Nvidia the last numerous months as I  said and um you know the E was still rising so you were actually getting it cheaper even though it  didn't have quite as big of like a selloff as you might have hoped but by sitting there and treading  water it did get more attractive. So, we are going to talk about Nvidia today. Not surprising, but  it is one of the cheapest of the AI stocks now.

[00:05:44]It's kind of being dissed. I don't know about you,  but a lot of people kind of looking down on it now because of it treading water in the recent months.  And so, for those who are momentum investors, it wasn't like the place to be for them. And so  people are kind of like me Nvidia's over now. We don't really care. But it is about to report  earnings again. And as I've said since 2023, you can't really keep Nvidia down for long. Uh  Jensen has a well-run machine there right now. And we're still seeing just tremendous growth levels,  especially given the last couple of years. And as I keep saying, Nvidia is doing things that we will  not see another company do again probably in our lifetimes. Although you may live long enough to  see somebody do it in a couple decades again from now. But this has just been a tremendous ride.  I don't think it's over yet and it is fairly attractive here as I said on a valuation basis and  certainly among its peers um on the semiconductor side it has gotten more attractive. So what is  going on with Nvidia? Why do I include it here?

[00:07:14]It actually has a fairly low PE ratio and Nvidia's  traded around 40 times on its forward PE for years. Even before the AI happened when they were  just known for gaming chips and things like that, they were always trading with a premium up there  around 40 to even 50 times. And then when AI hit, it was still trading at the premium around that  level, but it has gone into the 20s now. And I do consider that to be very attractive for a  company with this kind of growth profile. So, we're not overpaying for Nvidia here as long as  they're doing what they are showing that they're able to do. They also have a PEG ratio of just 69  right now and it's been under one for a while but this has gone down again as the stock has treaded  water here. So the the price has not been rising but the earnings have. So it's brought that PEG  ratio down. Now I'm not going to sit here and say it's cheap on any other fundamental. Price  to book is at 34. price to sales at 24. We know that that's crazy and super high and will not  stay for forever, but these other components are still attractive. So, as a value investor, I  am willing to buy these earnings at 27 times. And what's going on with those earnings? Well, we're  in the middle of fiscal 2027 with um Nvidia. So, they're on the the uh fiscal year and earnings  are expected to be up 70.4% 4%. Now, this year after rising 59.5 last year and then 130% the year  before that, and then 293% the year before that, which was 2023, the breakout year. But you would  think it would slow after doing these tremendous numbers with a market cap of 5.5 trillion now.  But no, it's not really slowing. So, we're in this fiscal 2027 next year, which will be starting  in the second half of this year. Um, we're looking at further earnings growth of 33.3%. So, you might  say, "Oh, it's finally starting to come down." But everybody has been cautious on the analyst side,  waiting to kind of see where things shake out because as I've always said about Nvidia the last  few years, eventually it will slow, but it hasn't.

[00:10:19]Uh so I'm I I was a little early on on predicting  it would slow from these growth rates, but it really it isn't. Uh we still see some earnings  estimates being increased for this fiscal year.

[00:10:36]One is higher just in the last week right now um  ahead of their upcoming earnings report. So we're now looking for 813. Just three months ago they  were looking for 736. So even within just the last quarter it's on the rise again. um most accurate  estimates are more bullish now than the Zach's consensus. So they're getting a little bullish as  I mentioned ahead of this earnings report which is coming on May 19th I believe. No May 20th sorry  May 20th. So um can they do it again? It's looking very bullish in the earnings estimates. The again  the valuations are not super extreme. the stock has busted out again to new all-time highs. So,  we're finally out of that range, the sixmonth range, but over the last 6 months, uh, thanks  to the recent breakout, it's now up 20%, 20.4% in the last 6 months, but it was tracking the S&P  500 until uh, just basically the last week or so, and that is up 9.2 2%. So, still a decent return  in 6 months to get nearly 10%. But over the last uh month, Nvidia up 19%. S&P has been on this uh  great run since the March 30th lows during the Iran war and it's up 8.5. a 5day return, 8.3%  now with Nvidia, and the S&P is up just half a percentage. And I'm recording this on May 13th.  So, it's starting to break out again. And I do consider this to be a good time to get in Nvidia.  And uh we'll see what happens with the earnings, but nobody is going to uh you know think that  Nvidia is not going to continue to execute and uh bring it when it reports earnings. So we've  got the breakout again. PE and PEG are cheap.

[00:13:04]That's enough for me. If I'm a value investor  looking around for the cheapest of the AI stocks, Nvidia is still at the top of the list. So  that's Nvidia NVDA. Now, I looked at a lot of the infrastructure stocks, and these are some  that I've covered here on the podcast in prior years when we were also looking for the cheapest  of the AI stocks. And those stocks are just too expensive right now as I mentioned earlier. So, we  couldn't really fit them into the show. Although, um, let me see. And these would be on the  construction side like a Masttec. They're just have really run after this recent earnings report.  And while earnings and uh sales are on the rise, it's just not enough. No, I was just looking  at, you know, some of the cooling stocks and they're all still pretty stretched here. Uh, like  I said, we're waiting for a pullback. We aren't really getting it yet. So, we'll see what happens  uh to some of these valuations when we get that 5 to 10% pullback. But the other cheap stocks,  the cheapest might be the ones that surprise you the most on this episode more than Nvidia  is that the two of the hottest stocks out there are actually two that are the most attractive  for value investors. And that includes Micron, ticker MU. We've talked about it um as when to  sell a stock. Should we be selling Micron? But uh I talked about how it is attractive here with  a forward PE of just 13. So even though it has had this crazy run and it continues to have this run,  Micron because it is a cyclical and those earnings are still rising just faster than the price is  going up then we're still getting a attractive PE ratio at least. Um let's see. It's got the Zach  number one rank. It's on a completely different fiscal year. So, it's not going to report earnings  again until June 24th. So, we have to wait until June to find out anything further. But earnings  estimates are on the rise again in the last week with Micron. We're seeing one higher for this  fiscal year and for next. We're looking for 58.46 now for this fiscal year. That's up from 3386  in just 90 days. So incredible growth also with Micron on the memory side. And then next year one  is higher as I mentioned. We're looking for 9805.

[00:16:13]That's up from 4623 in just 90 days. So this year  we're looking for 605% earnings growth as I laugh.

[00:16:28]Um again 5846 they made 829 last year. This is  the cycle we're obviously in it and the stock will look cheaper even with this PE rising when we're  in this kind of cycle. Um but I still consider it to be attractive here. PE is at 13 like I said  and so that's obviously a value PE but what about the rest what else is going on? Uh price price to  book 11 11.9 that's cheaper than Nvidia but that's not saying much price to sales 14.8 8 again also  cheaper than Nvidia by a lot but still above that key 10 level. So all of that is stretched but  we don't care because the PE is pretty cheap.

[00:17:18]So we're keeping our eye on that metric but I'm  still waiting for some kind of pullback. We're not really getting it with Micron on the actual shares  and so it's a little too hot for me to even handle but it is still on a PE basis among the cheapest.  So what are we looking at in the last month? Uh Micron up 93% again Nvidia up about 20 in the last  month. last five days. Micron up 22.9, Nvidia up just eight and the S&P 500 a half a percent. So,  we did have a little bit of a pullback yesterday um May 12th, but it even rallied off of that  pullback. So, it's just everyone wants to be in Micron. So, in that way, it's not very much like a  value stock. It's on everybody's radar and nobody is hating on it. Not yet. Um, but it is among the  cheapest on a PE basis. And then what about its partner in crime right now, SanDisk? SanDisk is  the other red hot for this year. And um I took a look to see what's happening with its valuations  because that stock is even uh hotter I want to say. Although it's it's calmed down a little bit  in the last week. It's up only 3.6% in the last five trading days. Over the last month it's up 60.  It has had a little mini pullback here. And then year to date up 422%. Micron's up 154. Nvidia  seemingly normal here at 18.9. That's normal, right? Um and then S&P is up eight now year to  date. Even with the Ron War selloff, we're still we're back we're back to pretty good growth on  the S&P. So SanDisk went uh public again in 2025.

[00:19:36]It was spun off of Western Digital and so we don't  have data going back as much but 206 estimates are looking for a gain of 277% on the earnings. But  even with this tremendous gain where the shares are up uh you know over 3,000% or let's see over  in the last year. Yeah 3,318% now versus Micron up 729% in the last year. Nvidia interestingly  even though it's been treading water and kind of trading sideways is now up 73% in the last  year. So, not too shabby if you've been kind of uh hanging on and sitting there in it. The S&P  is up 25 in that period. So SanDisk, we know it's been this tremendous winner, but the PE is  not that stretched even with the stock soaring up uh at 22 times because we do have the strong  growth uh with the E side. So we're looking at 6512 for this fiscal year. It's also on the fiscal  year and that's up from 3767 just 90 days ago. So, uh it's mirroring Micron and what's going  on there. Next year, next fiscal year, we're looking for 17771. That's up from 8975. In any  situation, these numbers would be crazy and they certainly are here, but in a good way. if you're  looking for that earnings growth. Obviously, it's a growth stock. I'm not going to deny that. But we  do have a decent PE with it because it does have this tremendous growth going on. So, it made only  $2.99 last year and it's supposed to make 6512.

[00:21:44]What can we say? But it does have these  interesting valuations going on, right? Obviously an A for growth, an A for momentum. It's got an F  for value, but it is among the cheapest. So price to book is at 15. That's stretched as we can see.  Price to sales 16.3. That's more expensive than even Micron, but uh it's under Nvidia. So am  I saying this is cheap? No. But on a PE basis, it's pretty attractive here. Um, Western Digital  itself is trading with a price uh PE ratio of 48 right now. And that used to be dirt cheap stock  where you could get it for like eight times. It was showing up always on our screens here. We've  covered it many times. and it was always just kind of boring and out there and nobody cared until now  when it's at all-time highs and soaring. But you can see the difference between like a SanDisk  which is at 22 times and Western Digital at 48 times. It's also expected to grow earnings 103%  this year. Estimates are on the rise sharply there too. Um but price to sales at 14 that's  very stretched price to book at 17. So if I'm choosing between SanDesk and uh Western Digital  SanDisk on a PE basis is half the price basically much more attractive than Western Digital is at  this level. So as a value investor I'm not that interested in Western Digital here. Growth you  can have at it. You don't care about the PE, price to sales, all of that. You are buying that  earnings growth and the sales growth which is uh you know double digits 35% expected this year,  34 next year for Western Digital. So all of this um we know how good the story is. That's why we're  interested in it even as value investors, but try to get it as cheap as you can. And some of these  that get kind of out of favor like in Nvidia, you know, that's not the shiny new one anymore. It is  Micron and SanDisk as the shiny new AI plays. Um, look at a stock. Let me just see what's going on  with like some of Nvidia's partners because they they usually do move in tandem. Okay, just looking  at like a Vertive, which I also own in the value investor. So, we have a PE of 57 with Vertive  now. No, nothing says cheap about that. Uh, we need a bigger pullback to get it just a little  more um, you know, attractive here. Price to sales is at 13 times now. Price to book is at 33. It has  the tremendous growth as well. It's not doing 100% anymore, but it is mirroring closer to Nvidia.  And earnings expected to be up 52% again this year after 47% last year. So, it is actually  executing and doing what it should be doing.

[00:25:11]But there's just no doubt as this stock continues  to hit new highs as well that uh this is a a much pricier stock here than um a couple of years  ago. So we're in the growth phase of the AI, but there's still pockets of uh interesting stocks  that are out there. And so we're looking for them.

[00:25:37]Try to find those that maybe aren't hitting new  all-time highs at the moment. I can't think of any area that really isn't. Maybe on the cooling side,  but even like Comfort Systems has been hitting new highs. I'm thinking of like an Eaton that has more  than just uh data center cooling and so it's a little bit slower growth. So Eaton, ticker ETN, is  trading at 30 times. But you don't have the growth component to say, "Oh, that's pretty cheap because  it's uh earnings are expected to be up 10.4% this year and 17% next year." Both of those are  super solid. Love to see it. Double digits. This company's been around for decades. Uh, but when  I get the PE of a 30 on just 10% earnings growth, I'm not that interested. I need to have the the  more uh bigger growth for me to pay up for those earnings. And it's just not there. If I could  get this at 20 times, I'd be more interested in eaten. That would be more attractive to me  as a value investor. But it's just not it's a little overextended here for me with that kind of  growth rate. But I continue to have some of these on my watch list. It is a little bit off of its  highs. That's why I said look at some that aren't at their highs. So it's trading at 406 right now.  It's 52- week high ahead of its earnings report was 435. But uh the earnings while they beat it,  it just isn't giving us the growth of some of these other names. So people who are bidded up on  that uh prospect are now, you know, disappointed and out of the stock. One other company that I do  own in the value investor that had a big sell-off on its earnings, but it's a Zach's number five  right now is Primorous Services, ticker PR IM, and it fell 50% on its earnings because the AI  play was factored in. Um and so everybody had these very high expectations and it's a specialty  contractor infrastructure company but they do a lot on um utility side. It's not all data centers  which is the faster growing segment in in that uh infrastructure side with higher margins.  So if you're not getting those higher margins you're just not going to get the growth rate. So  even for this year 2026 expected to grow earnings only 2% now and 2027 we're going to see a rebound  up 16.4 but the street just really isn't liking that it's at that 2% level here. Um and Ford P  of 22 now has come way down as the stock has has fallen. But is that even cheap enough to pay  up for this kind of earnings growth with this kind of company that is just not seeing the high  margin business like some of the others on the infrastructure side? Um I would say that there's  a reason it's a Zach's number five. Now all the analysts cutting their estimates there. Price to  sales is very interesting with primmeris here.

[00:29:25]It's at 08 which is an actual value price to  sales ratio. Price to book is at 3.65. Remember we look for three and under. So it's starting  to get that value proposition here. But I would uh watch those earnings estimates. Wait for a  turnaround. I don't recommend anyone buys the number fives, especially in this kind of scenario  where they reported it was a disappointment. Now the analysts are cutting their estimates. So for  this year, we're now down to 503 from 30 days ago.

[00:30:04]We were at 602 and you don't want to see it going  the other way. Um a rebound is expected next year, but you're going to have to wait till then. So,  these shares are probably going to pull back even further as everybody realizes, hey, the AI  trade just isn't as strong in this this company as some of the others. So, a little bit of a value  trappiness there going on with Primorus, but um that's why I'm not including it as the cheapest AI  stocks right now because with this kind of growth, we still want to see these uh you know this growth  scenario and not the earnings going the other way. So, let's recap the cheapest of the AI stocks  right now. We had Nvidia. Yes, it is in this group and it it does look attractive here. Ticker NVDA.  Then we had Micron with that 13 PE. Everything else is not cheap, but everybody's keying in on  that 13. So, we're including it because of that PE ratio. But remember, it is cyclical. So, the  PE will be lower here as the stock surges. And those earnings are just uh crushing it. Crushing  it higher. Ticker M as in Mary U. SanDisk is SN DK. Um I mentioned Eaton. That's ETN. I'm on the  sidelines watching that one waiting for it to get cheaper. Uh Primmeris. I'm in it. I own it and the  value investor owns it, but uh it's not long for the portfolio most likely. Uh, it's got the Zach  number five strong sell rank now and it's ticker P as in Paul, R, I, M as in Mary if you want to keep  it on a watch list and see if it can get even more attractive here. So, uh, we're keeping an eye on  everything AI and I ran those other screens, as I said earlier, to try to find, you know, any other  AI type stocks that are classic value. It's just not there anymore. So, we are getting longer in  the AI cycle. It's harder for value investors to be in it. But look strategic. pick the companies  that are dominating in AI like an Nvidia. And as John Plank always says, you don't have to be  a genius. We know where the earnings and sales growth is right now on the AI trade. Um, and it  is in the semis and so and in storage now memory.

[00:32:47]So keep Nvidia on your watch list if you're not  in it. But otherwise, it remains a cheaper AI stock. And as always, I aim to bring you as many  cheap stocks as I can. The values, the traps, all of that every week here on the Value Investor  podcast. Be sure to subscribe. Get us on YouTube, on our own YouTube channel. We have Zach's  podcast channel. And also get us on Apple, get us on Spotify, get us on Amazon Music.  Anywhere you can get podcasts, you can find us and I'll be back next week with some more cheap stocks  or value stocks. This material is being provided forformational purposes only and nothing herein  constitutes investment, legal, accounting or tax advice or a recommendation to buy, sell, or hold a  security. Do not act or rely upon the information and advice given in this podcast without seeking  the services of competent and professional legal, tax, or accounting council. Publication and  distribution of this podcast is not intended to create and the information contained herein does  not constitute an attorney client relationship.

[00:33:51]No recommendation or advice is being given as to  whether any investment or strategy is suitable for a particular investor. It should not be  assumed that any investments in securities, companies, sectors, or markets identified  and described were or will be profitable.

[00:34:01]All information is current as of the date herein  and is subject to change without notice. Any views or opinions expressed may not reflect those  of Zach's investment research as a whole.