3 Cheap AI Stocks

The rapid growth of the AI industry has sent tech stock prices soaring, but some AI companies still offer attractive valuations for investors. Despite recent share price declines due to macroeconomic conditions, three AI stocks—Taiwan Semiconductor Manufacturing (TSMC), Super Micro Computer (Supermicro), and Google parent Alphabet—are positioned for long-term growth.

AI Stock Bargains

Investors looking for bargains in the AI sector should consider Taiwan Semiconductor Manufacturing (TSMC), Super Micro Computer (Supermicro), and Google parent Alphabet. Compared to competitors like Nvidia, these three companies have lower price-to-earnings ratios, making them appealing investment options. Recent share price declines, driven by global economic uncertainty and tariff policies, have created an opportunity for investors to buy these stocks at a discount.

However, the long-term outlook for these companies remains strong due to the growing demand for AI technologies. As the AI market continues to expand, these companies are well-positioned to benefit from increased adoption of AI solutions.

Taiwan Semiconductor Manufacturing (TSMC)

TSMC is a leader in AI chip manufacturing, known for its ability to produce advanced 3-nanometer (nm) chips in large volumes. This technology accounted for 22% of the company's $25.5 billion in first-quarter revenue, up from 9% the previous year. TSMC's Q1 sales grew 35% year over year to $25.5 billion, and its Q1 gross margin rose to 58.8%, up from 53.1% the previous year.

The company is also developing its next-generation 2nm technology, expected to enter production later this year. TSMC anticipates Q2 revenue between $28.4 billion and $29.2 billion, a 37% increase from the prior year's $20.8 billion. Additionally, TSMC received $6.6 billion in federal funding under the CHIPS Act to build semiconductor fabrication facilities in the U.S., further solidifying its long-term growth prospects.

Super Micro Computer (Supermicro)

Supermicro provides servers and data storage solutions for businesses developing AI systems. In its fiscal 2025 Q3 (ended March 31), Supermicro's revenue reached $4.6 billion, a 19% year-over-year increase. While this growth was strong, it fell short of the company's forecast of at least $5 billion in sales due to customer purchasing delays.

Despite short-term challenges, the AI market's projected growth from $184 billion in 2024 to $826 billion by 2030 is expected to support Supermicro over time. The company anticipates closing out fiscal 2025 with sales between $21.8 billion and $22.6 billion, a substantial increase from the prior year's $14.9 billion. Through the first three quarters of fiscal 2025, Supermicro's sales of $16.2 billion already exceeded the previous year's total revenue, indicating strong momentum.

Alphabet (Google)

Google parent Alphabet is heavily investing in AI, spending $52.5 billion in capital expenditures last year to develop advanced AI systems. AI is integrated into every major Alphabet product, including Google's search engine and Google Cloud, contributing to double-digit year-over-year sales growth in Q1. Google's revenue reached $50.7 billion, and Google Cloud earned $12.3 billion, helping Alphabet achieve $90.2 billion in total Q1 revenue, up from $80.5 billion in 2024.

Alphabet's self-driving car business, Waymo, uses AI to make autonomous driving decisions and provides over 250,000 passenger rides per week, a fivefold increase from the previous year. While Alphabet's stock has declined due to macroeconomic conditions and antitrust cases, these challenges may not significantly impact its business in the long term.

In conclusion, TSMC, Supermicro, and Alphabet have faced headwinds that have lowered their share prices, creating a buying opportunity for investors with a long-term view. The AI market's continued growth and these companies' success in AI position them for strong performance in the coming years, making their current stock valuations appealing.