We recently published a list of 15 AI Stocks That Are On Sale. In this article, we are going to take a look at where Aptiv PLC (NYSE:APTV) stands against the other AI stocks that are on sale.
Big Tech: The Best Performing Sector of Q2?
Big tech, specifically artificial intelligence, is the sector that many are starting to consider as the best-performing sector of the market in the second quarter of 2024. The concentration of the major players in this space has been in the large-cap companies since your ability to fully develop AI and benefit from its profitability really depends on the scale of your business. Basically, the bigger a company is, the better it will be positioned within the AI-led market this year. Because of this phenomenon, big tech companies, with all the money in the world to invest in AI development, are ensuring that this revolutionary tech drives the overall tech sector to record highs in 2024.
According to Alex Kantrowitz, Founder of Big Technology, these trends can be expected to lift up other sectors in the market that have a strong relationship with AI. One such sector is energy, which, according to Kantrowitz, is going to be seeing a lot more demand from customers that are developing AI and creating and training Large Language Models. While many players in the AI space today are also working on finding ways to use energy for AI development more efficiently, the general consensus seems to be that there’s a need to tap into more existing sources of energy until such methods are found. Because of this, the markets may see demand for nuclear energy rise to unprecedented levels as well.
AI in Digital Advertising
Another sector that might catch the AI draft and be propelled higher is digital advertising. With the rise of AI-powered marketing clouds, many advertisement-focused businesses are beginning to see immense increases in their return on investment. According to David Steinberg, the CEO of Zeta Global, AI is leading to immense growth within the advertising ecosystem, with Steinberg expecting growth in low double-digits this year. He noted that the launch of ChatGPT was the “big renaissance moment” for AI, which changed our perception of this technology from being a figment of science fiction to something serious enough to be discussed in company board rooms. Because of this, Steinberg believes that every company out there in advertisement and retail is pivoting its business to incorporate high-quality enterprise AI usages in its operations.
Part of the reason why AI is taking over the market in this manner is the promise it makes – efficiency coupled with revenue growth. By focusing on AI development and integration, businesses across the globe can increase their efficiency while also generating higher profits for themselves and their shareholders. Considering this, and the fact that AI stocks have been performing exceptionally well in the second quarter, we have compiled a list of some AI stocks on sale that investors may wish to consider for their portfolios this year.
Our Methodology
We first compiled a list of 40 AI stocks by sifting through ETFs and online rankings, including our own rankings. We then selected the 15 stocks with P/E ratios lower than the S&P 500’s P/E of 24.1 as of September 27 (according to data from WSJ) and with expected EPS growth for this year. The stocks are ranked based on their P/E ratios, from the highest to the lowest. We also mentioned the number of hedge funds holding stakes in each stock, as of the second quarter.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A closeup of a hand holding a car engine component, highlighting the precision of the company’s engineering.
Aptiv PLC (NYSE:APTV)
Number of Hedge Fund Holders: 38
Expected Earnings Growth: 28.4%
P/E Ratio: 11.8
Aptiv PLC (NYSE:APTV) is an automotive parts company. It is based in Ireland. The company has been deploying AI and ML in its offerings, and it thus offers critical technologies for vehicle safety and security, such as autonomous driving tech, sensing and perception systems, and vehicle connectivity systems.
With the rise of EVs, connected vehicles, and a focus on software and digitalization in the automotive industry, Aptiv PLC (NYSE:APTV) is expected to see its business grow exponentially as more consumers gravitate towards advanced driver assist systems (ADAS).
Considering the immense growth potential of Aptiv PLC (NYSE:APTV) as more drivers and businesses switch to electric or hybrid vehicles, many investors are beginning to see the intrinsic value of this stock, which is not reflected by its share price as of now. As a result, Aptiv PLC (NYSE:APTV) is beginning to be considered one of the cheapest automotive players in the AI space this year.
There were 38 hedge funds long Aptiv PLC (NYSE:APTV) in the second quarter, with a total stake value of $1.03 billion.
ClearBridge Investments mentioned Aptiv PLC (NYSE:APTV) in its first-quarter 2024 investor letter:
“Stock selection in the consumer discretionary sector was the leading detractor from relative performance, driven by idiosyncratic issues within a handful of holdings. Automotive parts supplier Aptiv PLC (NYSE:APTV) faced pressure as headwinds to the broader auto-cycle and a slowing in electric vehicle adoption weighed on margins. However, we believe that the company’s above-market growth, combined with opportunity for margin expansion, are compelling at its current valuation as the auto-cycle rebounds.”
Overall APTV ranks 3rd on our list of AI stocks that are on sale. While APTV is an exceptional investment, we believe that AI stocks hold promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than APTV and which trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.