Artificial intelligence (AI) is rapidly changing the technological landscape, and although it’s still early in its development, recent market corrections have created buying opportunities for investors looking at the players in this sector. Here are three companies that appear to be strong AI investments.
Nvidia
Nvidia (NVDA) has become synonymous with AI, and its leading hardware has helped it become one of the world’s largest companies. Despite the recent tech sell-off, Nvidia’s core strengths remain, particularly in the burgeoning AI infrastructure. The company is the dominant maker of graphic processing units (GPUs), which are the primary chips used for training and running AI models because of their impressive parallel processing power. These chips were initially designed to improve graphics rendering in video games, but Nvidia created a free software platform called CUDA that allows developers to program GPUs—but only Nvidia’s GPUs—to perform other tasks. This has given Nvidia a significant advantage.
Spending in AI infrastructure continues to rise, with cloud computing infrastructure providers expanding AI processing capabilities to meet increasing demand. Companies developing AI models require exponentially more computing power, which further strengthens the demand for Nvidia’s products. All this suggests that Nvidia should have another strong year of growth.
Currently, Nvidia’s shares are trading at attractive valuations. It has a forward price-to-earnings (P/E) ratio of 25 times 2025 analyst estimates and a price/earnings-to-growth (PEG) ratio of under 0.5. Positive PEG ratios below 1 often suggest an undervalued stock.
Alphabet
Trading at a forward P/E ratio of 18.5, Alphabet (GOOGL) is another AI stock that presents a compelling buy opportunity. The company owns strong, market-leading businesses and several promising emerging ventures. Its cloud computing unit has seen significant growth driven by AI-related demand, with revenue up 30% last quarter and profitability soaring. Alphabet has also developed its own AI chips.
Alphabet is starting to incorporate its new Gemini 2.0 AI model throughout its business, including Google search. While some worry about the impact of AI chatbots on the traditional search business, Google has historically only served ads in connection to 20% of its queries. New ad forms attached to AI-generated results should allow it to better monetize the large percentage of searches for which it currently does not serve ads. In addition, the company has the world’s most-watched video platform (YouTube) and strong digital ad network.
Salesforce
Salesforce (CRM) leads in customer relationship management (CRM) software and has expanded into automation, analytics, and employee communication through acquisitions. Salesforce’s next big growth driver is expected to come from agentic AI. Agentic AI is the evolution of AI beyond generative AI, where AI creates content based on user prompts. Agentic AI will create AI agents that perform tasks based on instructions with less direct human oversight.
Salesforce is entering the agentic AI market with its Agentforce offering. Launched in October, the company has already secured 5,000 Agentforce deals. It offers out-of-the-box AI agents for specific tasks like customer service, along with customization tools. Agentforce is a consumption-based product, potentially making it a significant growth driver for the company. Salesforce recently launched AgentExchange for expanded use cases with many initial partners.
The stock is attractively valued at a forward P/E of 26. Software-as-a-service businesses typically command high valuations because of the recurring and predictable nature of their revenue.
