In a fast-growing segment like artificial intelligence (AI), it's not always easy to spot bargains; however, they can be found. One of the best ways to find bargains in a hot sector is to look beyond stocks' price-to-earnings (P/E) ratios and instead look at their price/earnings-to-growth (PEG) ratios, as this metric takes into consideration their earnings growth.
Stocks with PEGs under 1 are generally considered undervalued, and based on this metric, five of the best values in the AI space are Advanced Micro Devices (AMD 1.12%), Broadcom (AVGO -0.27%), Salesforce (CRM 0.49%), Nvidia (NVDA -1.14%), and Adobe (ADBE -0.33%).
AMD PEG Ratio (Forward 1y) data by YCharts
Let's look at why these bargain AI stocks could be great buys.
Advanced Micro Devices (forward PEG 0.2)
With a forward PEG of only 0.2 based on its projected 2026 growth, AMD is one of the cheapest stocks in the AI space -- if it can live up to its growth expectations. The company has already been seeing solid growth, with its overall revenue climbing by 36% last quarter to $7.44 billion, while its data center segment revenue surged 57% to $3.7 billion.
The growth is being led by the company's strong positioning within server central processing units (CPUs) and solid growth from its graphics processing units (GPUs). The former acts as the brain for computers, while the latter provides the processing power. While the market for CPUs is not nearly as robust as the one for GPUs in the data center space, it is still a nice, growing market, and AMD has been taking share.
However, the company's biggest opportunity will come when the AI market shifts from training more toward inference, which is expected to eventually be the much larger market. Inference is less technically demanding than training AI models, and things such as latency, power consumption, and cost come much more into play. This should allow AMD to take some market share in the GPU space, which would fuel a lot of growth moving forward.
Broadcom (forward PEG 0.4)
Broadcom is another cheap chip stock with a big opportunity in front of it. The company is seeing solid growth, with revenue jumping 25% last quarter to $14.9 billion, led by a 70% surge in its networking revenue. However, it is its foray into custom AI chips that has the potential to really drive growth higher.
The company has seen strong success with its first custom AI chip customer, Alphabet, which has led to it winning additional customers. It sees its three furthest-along custom AI chip customers being a $60 billion to $90 billion serviceable market opportunity in its fiscal year 2027 (ending October 2027). If it can capture much of this opportunity, then the stock has a lot of potential upside from here. Notably, that number does not include more recent custom chip customer wins, including Apple.
With a PEG of around 0.4 based on fiscal 2026 earnings, Broadcom has some serious upside potential. The biggest risk for it, as well as AMD, would be a slowdown in AI infrastructure spending.
Image source: Getty Images.
Salesforce (forward PEG of 0.5)
Given their recurring revenue model, software-as-as-service (SaaS) stocks typically trade at premium valuations, but that is not currently the case with Salesforce. With a forward PEG of around 0.5, the stock is in the bargain bin.
However, the company has strong data-center and AI opportunities ahead. It's been seeing strong momentum with its Data Cloud solution, which helps customers unify their data into a single source, while it is also looking to be an agentic AI leader with its Agentforce platform. Last quarter, its Data Cloud annual recurring revenue (ARR) soared 120% year over year to more than $1 billion, while its Agentforce platform reached ARR of $100 million after only being launched last fall.
The company is looking to tightly integrate Data Cloud and Agentforce with its apps, such as Tableau and Slack, to help spark a new era of digital labor. Meanwhile, it recently introduced a new flexible Agentforce consumption-based pricing model more aligned with outcomes to increase customer satisfaction and drive adoption.
While there is always a risk its strategy will not work, at its current valuation, there is not much downside if it doesn't and a lot of upside if it does.
Nvidia (forward PEG of 0.7)
It's sometimes hard to believe investors can get the preeminent AI growth stock at a forward PEG of only 0.7 times. However, based on fiscal 2026 projections, that's Nvidia's current valuation. The company has grown its data center revenue ninefold over the past two years, and more growth is ahead.
While competitors are trying to make inroads, Nvidia is still the dominant market share leader when it comes to AI chips. It had an incredible 92% market share in the GPU space in Q1. Nvidia's secret sauce remains its CUDA software platform, which it developed to help expand the use of its chips beyond their original purpose of speeding up graphics rendering in video games. It has since layered a collection of libraries and tools on top of CUDA that enhance the performance of its chips in AI tasks.
Nvidia's newest chips remain in high demand, and the company is well positioned to continue to be one of the biggest beneficiaries of the current AI data center buildout. An AI infrastructure spending slowdown is a risk, but the stock is far from being priced for perfection, giving it solid upside potential from here.
Adobe (forward PEG of 0.8)
Adobe isn't a high-growth stock, but with a PEG of 0.8, it's fallen into the category of growth at a reasonable price (GARP). While AI isn't helping accelerate revenue growth, it has helped it settle in a nice, high-single-digit, low-double-digit range.
The company is using AI to help drive results within its creative software solutions, as well as its products aimed more toward business professionals. At the heart of its strategy is its Firefly generative AI model. Using just natural language prompts, FireFly can help users generate images, video, audio, and vector content that they can further manipulate with Adobe's creative tools, such as Photoshop, all while ensuring intellectual property protection. Document Cloud and Express have also incorporated FireFly into their platform and can handle everything from summarizing documents in Document Cloud to text-to-video generation in Express.
All in all, the stock is inexpensive, and it looks like AI should continue to help power Adobe's results moving forward.
