The 3 Most Affordable Megacap Artificial Intelligence Stocks to Consider in 2025

Are you looking for the most affordable megacap artificial intelligence (AI) stocks to invest in for 2025? The answer to this question can vary depending on how you define both megacap stocks and cheap stocks.

Generally, we can agree that a megacap stock is one that has a market capitalization of at least $200 billion. However, when it comes to identifying the cheapest AI stocks within this group, the task becomes more complex. Different valuation metrics yield different lists.

Investors may also have differing opinions on what qualifies a stock as an AI stock. Should a company merely be using AI in its operations, or must it be marketing AI-specific products? The most significant debate will likely be over which stocks that fulfill the criteria of being cheap, megacap, and focused on AI are the best options for investment this year.

For this analysis, I will use the price-to-earnings-growth (PEG) ratios based on data from LSEG as my primary valuation metric. I will consider only companies that produce significant AI-related products and services. Additionally, I will assess LSEG's analyst recommendations alongside my own insights to determine which stocks are worthwhile investments.

With these definitions in mind, here is my list of the three cheapest megacap AI stocks to consider buying in 2025.

1. Advanced Micro Devices

Advanced Micro Devices (AMD) is close to qualifying as a megacap stock, with a market cap of about $204 billion. Although its forward earnings multiple stands at 24.6, which may not seem cheap, the stock reveals a much more attractive PEG ratio of 0.32 when taking into account the projected five-year earnings growth as estimated by LSEG analysts.

AMD firmly fits within the AI category, as its microchips power AI applications both on personal machines and in data centers. The upcoming acquisition of AI infrastructure company ZT Systems is also set to enhance its AI capabilities.

Is now a good time for investors to consider AMD? I believe so. While it may not surpass Nvidia in the AI chip sector, I expect AMD to experience solid growth over the long term. The recent stock sell-off appears to have been excessive.

2. Alibaba Group Holding Ltd.

Alibaba Group Holding Ltd. (BABA) is another organization that barely crosses into megacap status, with a market cap slightly below $205 billion. However, its valuation seems quite favorable.

This stock trades at around 8.9 times forward earnings, and its PEG ratio sits at 0.57, according to LSEG data. Even its trailing price-to-earnings multiple of 17.7 is considered low.

Alibaba is often referred to as the "Amazon of China," as it runs a massive e-commerce platform similar to Amazon's and serves as a significant cloud services provider as well. However, comparisons regarding recent growth rates between Alibaba and Amazon reveal a disparity.

Although I have reservations about investing heavily in Chinese-based stocks due to the country's current economic situation and unpredictable government actions towards businesses, Alibaba does provide essential products and services to a vast market. Those purchasing now may see strong returns in the long run.

3. Broadcom

When discussing "mega megacap stocks," Broadcom (AVGO) is certainly among the leaders with a staggering market capitalization of $1.15 trillion, effectively doubling its value from the previous year.

At a glance, Broadcom might appear overvalued, trading at nearly 38 times its forward earnings. Yet, the stock's PEG ratio of 0.68 suggests that analysts are forecasting considerable growth in the coming years.

I share the optimistic sentiment regarding Broadcom's future. In its latest quarter, the company's AI revenue surged by 220% year-over-year, primarily driven by sales of Ethernet networking products and XPU custom AI accelerators. The recent acquisition of VMware also introduces promising opportunities for growth.

In summary, investors looking for affordable megacap AI stocks in 2025 have several options to consider. With thoughtful analysis and careful selection, these companies could serve as strong additions to a diversified portfolio.

stocks, AI, investment