Forget the ‘Magnificent Seven’ — These 7 Cheap Tech and AI Stocks Are Better Buys Right Now
The “Magnificent Seven”—Alphabet, Apple, Meta Platforms, Microsoft, Nvidia, Amazon, and Tesla—have dominated market gains in recent years, particularly in artificial intelligence (AI) and tech. However, their high valuations and sensitivity to economic shifts, such as potential tariffs under President Trump’s policies, have prompted investors to seek undervalued alternatives. A mutual-fund manager highlighted by MarketWatch on June 24, 2025, emphasizes finding discounted stocks during uncertainty, outperforming the market by focusing on lesser-known tech and AI players. Below, we explore seven cheap tech and AI stocks that offer compelling value and growth potential, based on recent analyses and market sentiment.
Why Look Beyond the Magnificent Seven?
The Magnificent Seven have driven significant market performance, but their lofty price-to-earnings (P/E) ratios (e.g., Nvidia at 24x forward earnings, Meta at 33.7) make them less attractive in volatile conditions. Concerns over tariffs, which could raise costs for tech firms reliant on global supply chains, have led to recent declines in these stocks. Meanwhile, smaller or undervalued tech and AI companies offer lower valuations, strong fundamentals, and exposure to the AI boom, making them better buys for long-term investors.
Top 7 Cheap Tech and AI Stocks to Consider
The following stocks are selected based on their undervaluation, AI exposure, and growth potential, drawing from recent analyses by Morningstar, The Motley Fool, Forbes, and posts on X reflecting investor sentiment.
- Palantir Technologies (PLTR)
- Price/Earnings: Forward PEG ratio < 1
- Why Buy: Palantir’s AI-driven platform enhances data analytics for government and commercial clients, with double-digit revenue growth in both sectors. Despite concerns over Pentagon budget cuts, its efficiency-driven AI solutions could secure more contracts. Recent stock declines make it a bargain, with analysts predicting strong commercial expansion.
- Risk: High volatility and dependence on government contracts.
- Investor Sentiment on X: Frequently cited as undervalued with significant AI upside.
- Broadcom (AVGO)
- Price/Earnings: ~23x forward earnings
- Why Buy: Broadcom’s networking solutions, including XPU chips and connectivity products, saw a 77% AI revenue increase to $4 billion last quarter. Its partnerships with major cloud providers position it for a $60–90 billion addressable market by 2027. Trading at a lower multiple than most Magnificent Seven stocks, it’s a solid AI infrastructure play.
- Risk: Exposure to tariff-related supply chain disruptions.
- Investor Sentiment on X: Praised for consistent AI-driven growth.
- SoundHound AI (SOUN)
- Price/Earnings: Not consistently profitable, high forward P/E
- Why Buy: Specializing in conversational AI, SoundHound powers voice interactions in automotive, restaurant, and consumer sectors. Its acquisition of Amelia expands enterprise applications. Despite a high P/E, its niche in voice AI and edge computing offers growth potential at a relatively low market cap.
- Risk: Early-stage profitability and competition from larger players.
- Investor Sentiment on X: Gaining traction as a speculative AI pick.
- Navitas Semiconductor (NVTS)
- Price/Earnings: Not profitable, speculative
- Why Buy: Navitas produces gallium nitride (GaN) semiconductors that enhance energy efficiency in AI data centers. Its collaboration with Nvidia on 800V HVDC systems for AI servers validates its technology. A high-leverage play on AI infrastructure, it’s undervalued for its potential impact.
- Risk: Small market cap and execution risks.
- Investor Sentiment on X: Under-the-radar but noted for AI energy efficiency exposure.
- Innodata, Inc. (INOD)
- Price/Earnings: High P/E due to recent growth
- Why Buy: Innodata provides data engineering for generative AI, serving five of the Magnificent Seven among its eight big-tech clients. Its stock has surged due to AI demand, but it remains undervalued compared to larger AI service providers.
- Risk: Potential for growth rate outliers to normalize.
- Investor Sentiment on X: Less discussed but recognized for AI data niche.
- Advanced Micro Devices (AMD)
- Price/Earnings: ~30x forward earnings
- Why Buy: AMD’s AI-focused data center segment grew 38% year-over-year, and its client segment surged 65% due to PC market recovery. With a market cap of $335 billion, it’s outperformed five Magnificent Seven stocks over the past year (152% gain). Analysts project EPS could reach $7 by 2026, potentially pushing the stock to $400.
- Risk: Heavy AI investment may delay profitability.
- Investor Sentiment on X: A top pick for AI chip exposure alongside Nvidia.
- CyberArk Software Ltd. (CYBR)
- Price/Earnings: ~44x forward P/E
- Why Buy: CyberArk’s AI-powered identity security platform protects against rising threats in AI-driven environments, delivering a 30% free cash flow margin in Q1 2025. Its focus on machine and AI identity security aligns with growing cybersecurity needs, making it a stable AI-adjacent investment.
- Risk: High valuation relative to earnings.
- Investor Sentiment on X: Noted for cybersecurity’s role in AI ecosystems.
Why These Stocks Stand Out
- Valuation: Most trade at lower P/E ratios than the Magnificent Seven (e.g., Alphabet at 18x, Nvidia at 24x forward earnings) or offer high growth at reasonable PEG ratios (e.g., Palantir < 1).
- AI Exposure: From chips (AMD, Navitas) to software (Palantir, SoundHound) and services (Innodata, CyberArk), these stocks cover diverse AI applications, reducing sector-specific risks.
- Growth Potential: Analysts project strong EPS and revenue growth, with Broadcom and AMD leading in infrastructure and Palantir in enterprise AI.
- Market Sentiment: X posts highlight enthusiasm for AMD, Palantir, and smaller players like SoundHound, reflecting retail investor interest in undervalued AI stocks.
Risks to Consider
- Tariff Impact: Proposed tariffs could raise costs for companies reliant on foreign manufacturing (e.g., AMD, Broadcom), though proactive U.S. investments (e.g., Nvidia’s manufacturing push) may mitigate this.
- Market Volatility: AI stocks, especially smaller ones like SoundHound and Navitas, are prone to sharp swings, as seen after events like the DeepSeek launch.
- Competition: The Magnificent Seven’s dominance in AI (e.g., Nvidia in GPUs, Alphabet in cloud) poses challenges for smaller players.
- Economic Uncertainty: Rising interest rates or weaker U.S. economic data could pressure growth stocks, as noted in recent market analyses.
How to Invest
- Brokerage Account: Open an account with platforms like Fidelity or Robinhood to buy these stocks. Limit individual stock exposure to 10% of your portfolio to manage risk.
- Research: Use tools like Morningstar Investor screener or Finviz to track valuations and performance. Review earnings reports for updates on AI-driven revenue.
- Long-Term Horizon: Hold for 3–5 years to capitalize on AI’s projected growth, expected to add trillions to the economy by 2030.
- Diversify: Pair these with broad-market ETFs (e.g., S&P 500 index funds) for stability, as recommended by NerdWallet.
Conclusion
While the Magnificent Seven remain AI powerhouses, their high valuations and tariff risks make cheaper alternatives like Palantir, Broadcom, and AMD more attractive for value-driven investors. These seven stocks offer diverse exposure to AI’s transformative potential at lower price points, with strong fundamentals and analyst backing. As the AI sector evolves, these undervalued picks could outperform, especially if economic conditions stabilize. Always conduct thorough research and consult a financial advisor before investing, given the sector’s volatility and geopolitical uncertainties.
