Artificial intelligence (AI) stocks have been among the best performers in the stock market over the past three years, which isn't surprising, as the proliferation of this technology has driven solid growth for several companies.
The Global X Artificial Intelligence & Technology ETF, which invests in companies that are on track to benefit from the deployment of AI in their products and services, along with companies developing hardware needed to run AI workloads, has jumped by 118% in the past three years. That's well above the 76% gains clocked by the S&P 500 index over the same period.
The good part is that investors can still buy some top AI stocks trading at incredibly attractive valuations right now. Nvidia (NVDA +0.93%) and Micron Technology (MU 0.49%) are two such companies. Let's look at the reasons these two AI names are trading below their true value.
Image source: Nvidia.
Nvidia
Nvidia has been the stalwart in AI hardware. Its graphics processing units (GPUs) have been used to train popular AI models and are now used for running inference applications as well.
The good news for investors is that Nvidia stock can still be bought at just 22 times forward earnings, even after rallying a whopping 654% in the past three years. That's because the company continues to clock impressive growth quarter after quarter. For instance, its earnings shot up by 60% in the recently concluded fiscal 2026 (ended Jan. 25, 2026).
The forecast for fiscal 2027 is rosier, with analysts expecting its earnings to surge by 73%. That's well above the 15% average earnings growth of the S&P 500 index this year. Now, the S&P 500 index has a forward earnings multiple of 22, almost in line with Nvidia's multiple. However, as Nvidia's earnings are poised to grow at almost 5 times the S&P 500's average, it should ideally trade at a significant premium.
NASDAQ: NVDA
Key Data Points
More importantly, Nvidia has the potential to sustain its healthy growth for a long time. That's because investments in data center infrastructure are expected to increase at an annual rate of 40% through 2030, reaching between $3 trillion and $4 trillion by the end of the decade. With Nvidia controlling a robust 81% of the AI chip market, it is well placed to capitalize on this lucrative opportunity.
That's why it would be a good idea to buy Nvidia while it is still cheap.
Micron Technology
Similar to Nvidia, Micron is trading at an extremely attractive 11.5 times forward earnings right now. That's about half the S&P 500 index's forward earnings multiple, even though analysts estimate the company's earnings will jump by more than 4 times in the current fiscal year. What's more, Micron's estimated earnings growth of 34% for the next fiscal year is more than double the earnings growth that S&P 500 companies are anticipated to deliver.
NASDAQ: MU
Key Data Points
However, the market is underestimating its potential. That's because the demand for memory chips exceeds the supply, and this supply constraint is unlikely to go away until 2028, at least. Micron, therefore, seems on track to sustain its terrific growth rates for the long run.
Not surprisingly, Micron has a price/earnings-to-growth ratio (PEG ratio) of just 0.64 based on the annual earnings growth it is expected to deliver over the next five years, according to Yahoo! Finance. A PEG ratio below 1 indicates that a company is undervalued when its growth potential is considered, suggesting that Micron is a no-brainer buy right now.
