3 AI Stocks That Are Way Cheaper Than Apple Right Now

Apple (NASDAQ: AAPL) is the one stock that hasn't been severely affected by a bit of a marketwide sell-off over the past month. Although there's been a bit of a rebound, there are still several intriguing stocks that are priced far lower than Apple.

I'm focused on three companies that have a lower valuation, and all three are growing at a far faster rate than Apple. Furthermore, these are all high-quality companies that have legendary execution, similar to Apple.

Let's take a look at these three stocks and determine if they're truly better deals than Apple right now.

Image source: Getty Images.

Apple's growth rate has been lackluster

First, let's take a look at Apple. Although Apple has made some headlines in recent days about its upcoming folding iPhone, the reality is there hasn't been much innovation from Apple over the past few years. This has led to some fairly stagnant growth, although its most recent quarter was the best in years.

AAPL Revenue (Quarterly YoY Growth) data by YCharts

We'll have to see if this acceleration pattern continues, or if it was a flash in the pan, as its current valuation may support a company that can consistently grow in the mid-teens, but not one that's growing in the high single-digits like it was for nearly five years.

AAPL PE Ratio (Forward) data by YCharts

At 31 times forward earnings, Apple stock is far from cheap and trades at a massive premium to the S&P 500, which trades for 20.3 times forward earnings. Many stocks are far cheaper and are growing much faster, and I think all of them have a better investment case over Apple.

Nvidia

Some may be surprised to see Nvidia (NASDAQ: NVDA) on this list, as it has a reputation for being "overvalued." However, that's far from the case. Nvidia trades for 22 times forward earnings -- nearly 50% less than Apple. That's a big discount, but it also comes with some incredible growth rates.

Over the next two quarters, Wall Street analysts project Nvidia's growth rates to be 79% and 85%, respectively. Considering that Nvidia's GPU business has been booming since 2023, the fact that it's still doing this well several years later is impressive.

Nvidia looks like a far greater buy than Apple, and with its faster growth and cheaper stock price, should easily outperform Apple over the next few years.

Microsoft

Microsoft (NASDAQ: MSFT) and Apple have been mentioned in the same sentence for a long time in the investing world. Both are stalwarts in the tech industry and have been leading the market higher for over a decade. For the longest time, Apple's and Microsoft's valuations were incredibly similar, but now, Microsoft has broken away to be far cheaper.

AAPL PE Ratio data by YCharts

Microsoft isn't doing anything wrong; its latest quarterly results included 17% revenue growth. It's also still a leader in the AI realm, with Azure a popular platform for running AI workloads.

This mismatch doesn't happen often, and with Microsoft usually priced at the same level as Apple, I think it's slated to deliver strong returns over the next year, as it will likely return to a 30 price-to-earnings multiple.

Taiwan Semiconductor Manufacturing

Last is one of Apple's key suppliers: Taiwan Semiconductor Manufacturing (NYSE: TSM). Taiwan Semiconductor makes most of the chips for Apple's products. Taiwan Semiconductor also makes most of Nvidia's chips, and it is the world's largest chip manufacturer by revenue. It's seeing monster growth for AI chips, and all of this is helping to power TSMC's stock higher over the long term. Management believes it can generate a 25% compound annual growth rate (CAGR) from 2024 to 2029, which would far exceed anything Apple is doing.

While Taiwan Semi isn't as cheap as the other two on this list, 27 times forward earnings isn't a bad price to pay for a company that's nearly guaranteed to thrive over the next decade.

Keithen Drury has positions in Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing and is short shares of Apple. The Motley Fool has a disclosure policy.