3 Artificial Intelligence (AI) Stocks That Are Cheaper Than They Look

Do you want to invest in some underrated artificial intelligence (AI) stocks? The ones that are listed here may be intriguing options because while they might seem expensive at first glance, they are a lot cheaper once you factor in their growth prospects.

Three AI stocks that you'll want to consider buying right now are Advanced Micro Devices (NASDAQ: AMD), Intuit (NASDAQ: INTU), and Workday (NASDAQ: WDAY). Although they are trading at price-to-earnings (P/E) multiples of 50 and higher, here's why they may look like deals in the long run.

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Advanced Micro Devices

When you think of a top AI chipmaker to invest in, odds are you're thinking about Nvidia, which is the most valuable company in the world. But a potentially better growth stock to consider is Advanced Micro Devices, better known as just AMD. It's a fraction of the size of Nvidia and it's still in the early stages of growing its AI chip business.

The company recently announced a multiyear agreement with ChatGPT-maker OpenAI that will involve the deployment of 6 gigawatts worth of AMD GPUs. AMD has been working closely with OpenAI in the past and management projects that its partnership will result in "tens of billions of dollars in revenue."

AMD's growth rate has been strong of late, with sales rising at a rate of 32% in its most recent period (ended on June 28), totaling $7.7 billion. And CEO Lisa Su anticipates "significant growth" in second half as the company rolls out its latest products, including its Instinct MI350 accelerators.

This is an underrated growth stock to own, because while AMD trades at a P/E of more than 100, its forward P/E multiple, which is based on analyst expectations of future earnings, falls to around 29. Given its vital role in AI development, AMD's stock could have massive potential to become much more valuable in the future.

Intuit

A less flashy AI investment is Intuit, which is a provider of financial software, including QuickBooks and TurboTax. Intuit is incorporating generative AI into its software to provide users with a financial assistant that can give personalized recommendations.

Intuit recently wrapped up a stellar fiscal year, which finished on July 31. Revenue of $18.8 billion rose by 16% year over year and earnings grew by 31% to $3.9 billion. Customers rely on its trusted software titles, making them staples in businesses throughout the country. Given the complexities of the tax code and all the accounting rules to sift through, there is tremendous opportunity for Intuit to help add efficiency for businesses with AI, leading to more growth potential in the future.

At a P/E multiple of 50, you might be spooked by Intuit's seemingly high price. But its forward P/E of less than 30 suggests it's a much better value buy.

Workday

Rounding out this list is Workday, an automation company that has considerable growth opportunities to tap into in the future as a result of AI. It's utilizing AI agents as a way to help automate things like payroll input, audit evidence collection, and recommending business process improvements.

It also recently announced the acquisition of Sana for $1.1 billion. The company helps create AI agents to automate tasks. One of the things Workday's customers will be able to use Sana for is to help automate performance reviews. This comes after Workday recently bought Paradox, which is another AI company. Its software uses automation to help hire and onboard employees.

Workday's revenue for the quarter ending July 31 totaled $2.3 billion and rose by 13% year over year. But with more opportunities related to AI agents and automation, its growth rate may potentially accelerate in the future.

The stock looks massively overpriced, trading at over 100 times its trailing earnings. But non-recurring restructuring charges in an earlier period have impacted the multiple considerably. Workday's forward P/E of 22 puts into light just how attractively valued the tech stock truly is.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intuit, Nvidia, and Workday. The Motley Fool has a disclosure policy.