It’s hard to find “ridiculously” undervalued stocks in this market, especially ones that have the opportunity to capitalize on the AI (artificial intelligence) growth trend. Indeed, we may be witnessing a technological revolution, but that does not mean that it’s going to be all joy and upside with no pain and losses.
Of course, some folks may be inclined to draw comparisons of the current bullish AI-driven boom to the one that preceded the great dot-com bubble burst.
And while the bull market isn’t quite partying like it’s 1999 — how could you say that Alphabet (NASDAQ:GOOG) is anything other than dirt-cheap while it’s trading at just north of 20 times trailing price-to-earnings (P/E)? — I do think that it’s entirely possible that 2025 is akin to 1997 or maybe even 1996. I’m inclined to think we’re closer to 1995 than 1997 or 1998, given AI stocks like Alphabet are still out there, trading at heavy discounts, and the unclear net effect that AI will have on the firm’s business.
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Is the rise of AI really bad for search?
Sure, firms like Perplexity could leverage AI to take share from Google, but I’d argue that if Google can do AI better than the rest (OpenAI’s ChatGPT included), then there will be nothing to worry about. Personally, I think the net effect will be a massive positive for Alphabet, especially as Gemini continues sprinting forward in an environment where some of its peers are showing signs of stumbling, at least in my personal view.
Perhaps Gemini will soon grab the AI crown
With Elon Musk’s Grok making inappropriate posts, Meta AI facing an investigation over “sensual” chats, and ChatGPT-5 experiencing a rough summertime launch, it’s clear that it’s easy to make mistakes in the wild world of large language models. Meanwhile, Google Gemini has been gaining speed. And I do think it’s poised to gain share of AI usage among everyday users. Indeed, some folks think that it’ll be Gemini that’ll pull ahead by year’s end. Indeed, on prediction markets, Gemini seems to be getting better odds.
With very frequent updates and some notable improvements, it appears that Google has, in fact, learned a great deal from its prior stumbles. With the stock recently pulling back to around $200 per share after a bit of market turbulence, I think there’s a real opportunity for investors (Canadian and American) to snag a market bargain while most others are distracted by recent developments and the chilling call of OpenAI’s Sam Altman that we may be in an AI bubble.
Brace for another AI correction. But don’t expect it to be a devastating bursting of the bubble, yet.
With Meta Platforms (NASDAQ:META) announcing another AI group restructuring while MIT released a report finding that 95% of gen AI bets aren’t delivering on the profitability front, it seems like the AI scene could be in for another one of its big corrections. Time will tell if recent comments and Meta’s course correction will lead to a DeepSeek-like scare for the AI names. Either way, I think investors should treat any such sector dip as a buying opportunity.
Despite the troubling recent developments for AI, I find it perplexing why GOOG stock is still going for so cheaply. Apart from fresh optimism for Gemini, the firm is also firing on all cylinders with YouTube and Google Cloud. And, of course, let’s not forget about Waymo and its potential to boom in the robotaxi market.
