3 No-Brainer Artificial Intelligence (AI) Growth Stocks to Buy With $200 Right Now
Key Points
- AI stocks have driven the S&P 500 higher over the past two and a half years.
- These three stocks trade at relatively low valuations compared to other AI leaders.
- They offer meaningful growth potential across AI software, hardware, and chip manufacturing.
Artificial intelligence has become a major focus on Wall Street recently. Over 40% of S&P 500 companies have mentioned AI during earnings calls for five straight quarters, according to FactSet Insight. Businesses are examining how AI innovations and spending can affect their operations.
AI can either boost growth or act as a cost center without clear returns. For investors with limited funds, like $200, it's critical to pick stocks that offer genuine value without overpaying for growth that might slow down. The following three companies trade below $200 per share and combine solid value with strong AI-related growth prospects.
1. Alphabet (NASDAQ: GOOG, GOOGL)
Some worry that AI is cutting into Alphabet’s core Google Search business. For example, Apple’s Eddy Cue noted search queries dropped on Safari in April for the first time in 22 years, suggesting AI services like ChatGPT may be impacting market share.
However, a drop in searches on one browser isn’t a major concern. AI actually supports Alphabet’s growth through features like AI Overviews in search that drive engagement and monetize as well as traditional results. Tools such as circle-to-search and Google Lens also lean heavily toward valuable product searches.
Google Cloud has been a significant AI growth driver. Its revenue rose 28% in Q1, with operating margins jumping from 9.4% to 17.8%. The business remains supply-constrained, so strong growth is expected to continue. Plus, Google Cloud’s margins still trail bigger competitors, signaling room for profit expansion.
Alphabet shares trade around $177, at roughly 18.5 times forward earnings — attractive compared to peers. While regulatory risks and AI’s impact on cash flow are concerns, Alphabet’s strong cash flow, cloud growth, and capital return program make it a compelling buy at this price.
2. Qualcomm (NASDAQ: QCOM)
Qualcomm isn’t usually linked with AI chip stocks since it mainly makes smartphone chips, not high-end GPUs or AI training silicon. But Qualcomm plans to enter the data center market, focusing on CPUs that complement AI accelerator chips. Its expertise in low-power, high-performance smartphone chips could translate well to data center designs.
The recent acquisition of Alphawave Semi aims to boost Qualcomm’s data center capabilities. Although competition will be fierce, AI processing is increasingly moving to devices themselves, offering benefits like security and speed. Qualcomm’s Snapdragon processors dominate high-end Android phones, positioning it to benefit from the rise of on-device AI.
Qualcomm’s licensing business is another strength. It holds patents on wireless baseband chips used in nearly every phone and earns royalties on each sale. While Apple is shifting to its own chips, few other manufacturers have the resources to cut Qualcomm out. This provides steady earnings support.
Trading near $160 per share with a forward P/E of 13.5, Qualcomm offers strong value. Its data center ambitions add upside, but even the core mobile and licensing businesses generate solid free cash flow at this price.
3. Applied Materials (NASDAQ: AMAT)
Chips for AI training and inference require specialized manufacturing equipment. Applied Materials produces a wide range of wafer fabrication tools, including etching, deposition, and process control equipment.
Its broad equipment portfolio allows cross-selling opportunities and a competitive edge over specialized vendors. Being one of the largest suppliers also supports heavy R&D investment, helping Applied Materials stay ahead in technology development.
The push to expand chip production has benefited Applied Materials. Despite sales restrictions in China and slower automotive sales, the company grew revenue 7% in Q1 and boosted gross margins to over 49%. Its equipment tends to have a long lifespan, generating recurring service revenue and making the product “sticky.”
Shares trade around $175, with a forward P/E near 18.5. This is attractive for a company growing revenue steadily with expanding margins. While the business can be cyclical, the trend toward more advanced chips supports long-term growth.
If you’re looking to invest $200 in AI growth stocks, these three companies offer a mix of value and exposure to different parts of the AI ecosystem — from software and cloud to chips and manufacturing equipment.