3 Budget-Friendly AI Stocks for Your Investment Portfolio

Published Date : 06/06/2025 

Discover three AI stocks that offer solid growth potential at reasonable valuations, making them attractive options for investors. These companies are investing heavily in AI and have demonstrated strong performance despite market challenges. 

Investors looking to add artificial intelligence (AI) stocks to their portfolio without breaking the bank have several options to consider. While many tech companies are trading at high valuations, there are still some promising stocks that can deliver strong returns. Here are three AI stocks that stand out for their growth potential and affordable prices: Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Alibaba Group Holdings (NYSE: BABA), and Advanced Micro Devices (NASDAQ: AMD).

Shares of Alphabet have seen a decline of around 11% this year due to concerns over antitrust issues and potential changes to its core operations. However, the company continues to invest heavily in next-generation technologies. Alphabet plans to spend $75 billion on capital expenditures this year, a clear indication of its commitment to innovation and growth. Despite the challenges, Alphabet's core business remains robust. The company's ad business, which includes Google Search and YouTube, continues to perform well. In the first quarter of this year, Alphabet reported a revenue of $90.2 billion, a 12% increase from the same period last year.

Alphabet's recent acquisition of cybersecurity company Wiz for $32 billion further enhances its growth prospects. The company already has a diverse portfolio of assets, including its own chatbot, Gemini, and its autonomous vehicle division, Waymo. With a trailing earnings multiple of just 19, Alphabet looks like a compelling investment opportunity.

For investors seeking an even more affordable AI stock, Alibaba Group Holdings is a strong contender. Trading at a trailing earnings multiple of 15, Alibaba offers a compelling risk-reward proposition. The company recently unveiled its latest AI model, Qwen3, which employs 

Frequently Asked Questions (FAQS): 

Q: What are some key factors to consider when investing in AI stocks?

A: When investing in AI stocks, consider the company's financial health, growth potential, technological advancements, and market position. It's also important to evaluate the management team and their strategic vision for the future of AI.

Q: Why is Alphabet a good AI stock to buy?

A: Alphabet is a good AI stock to buy because it has a diverse portfolio of assets, including Google Search, YouTube, and Waymo. The company is investing heavily in next-generation technologies and has a strong financial position, making it well-equipped to capitalize on the AI revolution.

Q: How does Alibaba's AI model, Qwen3, differ from other AI models?

A: Alibaba's Qwen3 model uses 'hybrid reasoning,' which balances deep-thinking tasks with more standardized questions that require speed. This approach makes it well-suited for a wide range of AI applications and positions Alibaba as a leader in the AI industry.

Q: What are some of AMD's AI-specific products?

A: AMD offers several AI-specific products, including its EPYC processors and Radeon Instinct accelerators. These products are designed to handle the demanding computational requirements of AI workloads efficiently, making AMD a key player in the AI hardware market.

Q: What are the risks associated with investing in AI stocks?

A: Investing in AI stocks comes with risks, including regulatory changes, intense competition, and rapid technological advancements. It's important to conduct thorough research and diversify your portfolio to mitigate these risks. 

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