5 Cheap AI Stocks to Buy in 2023

In this article, we will be taking a look at 5cheap AI stocks to buy in 2023. To read our detailed analysis of the artificial intelligence sector, you can go directly to see the 10 Cheap AI Stocks to Buy in 2023.

5. International Business Machines Corporation (NYSE:IBM)

Number of Hedge Fund Holders: 43

Upside Potential as of March 31: 11.1%

Average Analyst Price Estimate: $143.5

International Business Machines Corporation (NYSE:IBM) is an information technology company based in Armonk, New York. The company provides integrated solutions and services, including hybrid cloud platform and software solutions.

David Grossman at Stifel holds a Buy rating on International Business Machines Corporation (NYSE:IBM) shares as of January 23, alongside a $158 price target.

Wall Street analysts have placed an average price target of $143.5 on International Business Machines Corporation (NYSE:IBM) shares, with a high forecast of $160. In the fourth quarter, the company’s revenue was $16.6 billion, of which 43.6% came from its software operations. Its software revenues also increased by 2.8% year-over-year in that quarter to $7.3 billion.

Out of the 943 hedge funds tracked by Insider Monkey in the fourth quarter, 43 funds were long International Business Machines Corporation (NYSE:IBM), with a total stake value of $1.2 billion.

4. ASML Holding N.V. (NASDAQ:ASML)

Number of Hedge Fund Holders: 59

Upside Potential as of March 31: 19.66%

Average Analyst Price Estimate: $809.73

ASML Holding N.V. (NASDAQ:ASML) is an information technology company selling advanced semiconductor equipment systems comprising lithography, among more. Lithography tools are an integral part of AI chip production, making this company a vital part of the AI sector.

On January 26, Credit Suisse’s Adithya Metuku reiterated an Outperform rating on ASML Holding N.V. (NASDAQ:ASML) shares.

ASML Holding N.V. (NASDAQ:ASML) currently dominates the lithography market, claiming over 80% of the market share in the industry. Analysts have placed an average price target of $809.73 on the shares, which were trading at $676.68 on March 31. This gives the stock an upside potential of 19.66%.

In total, 59 hedge funds were long ASML Holding N.V. (NASDAQ:ASML) in the fourth quarter, with a total stake value of $5.1 billion.

ClearBridge Investments, an investment management company, mentioned ASML Holding N.V. (NASDAQ:ASML) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“ASML Holding N.V. (NASDAQ:ASML) makes semiconductor chip manufacturing equipment and is a leading supplier of lithography systems to the semiconductor industry. We expect ASML to grow above expectations as its innovative EUV technology is deployed and industry capacity expands. This in turn should lead to margin expansion and earnings leverage. In addition to more visible growth and profitability drivers relative to Intel, ASML also has a stronger balance sheet and higher returns on capital. As a semiconductor capital equipment provider, ASML directly improves the energy efficiency of semiconductor manufacturing, and governance and diversity initiatives at ASML are best in class.”

3. Baidu, Inc. (NASDAQ:BIDU)

Number of Hedge Fund Holders: 40

Upside Potential as of March 31: 21.1%

Average Analyst Price Estimate: $186.27

Baidu, Inc. (NASDAQ:BIDU) is a Chinese company specializing in internet-related services, products, and AI. It is planning on launching an AI-based chatbox in 2023.

Analysts at Loop Capital hold a Buy rating on Baidu, Inc. (NASDAQ:BIDU) shares as of March 28, alongside a price target of $215.

The search engine offered by Baidu, Inc. (NASDAQ:BIDU) holds a market share of 84% in the country. The stock was trading at a P/E ratio of 15 on March 22, which was 32% cheaper than its five-year average. Analysts on Wall Street hold an average price target of $186.27 on the shares, with a high forecast of $234.

Our hedge fund data shows 40 funds long Baidu, Inc. (NASDAQ:BIDU) in the fourth quarter. Their total stake value was $1.7 billion.

Horos Asset Management, an investment management firm, mentioned Baidu, Inc. (NASDAQ:BIDU) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“As I mentioned at the beginning of this quarterly letter, we took advantage of the meltdown in technology platforms to initiate new positions in companies in which we had already been shareholders in the past and whose valuation did not, until now, provide a sufficiently high margin of safety. Such is the case of PayPal and Baidu, Inc. (NASDAQ:BIDU).

In the case of Baidu, as many will know, it is known as the “Chinese Google”. The company has been the leading Internet search engine in the Asian country for years, which has given it a historically privileged position to monetize, through online advertising, a huge user base. However, the rise of two types of applications has called into question the sustainability of its business model. On the one hand, mobile social apps, such as ByteDance’s well-known TikTok, have emerged as a new model of online consumption, generating a new platform through which to monetize Internet users. On the other hand, even more disruptive in the long term, is the emergence of the so-called super apps: a sort of virtual Swiss Army knives that allow users to access many products and services without having to leave their interface at any time, making Baidu’s traditional search engine less attractive. In this field, Tencent (with its super app Weixin/WeChat), Alibaba (Alipay) and Meituan certainly stand out. These two factors have caused Baidu’s online advertising market share to drop from 17% in 2017 to less than 7% estimated for 2022.34 To this deterioration, we should add the collapse in market value of its stake in iQiyi (video platform controlled by Baidu) and its equity holdings such as Trip.com (hotel and flight platform) …” (Click here to read the full text)

2. SentinelOne, Inc. (NYSE:S)

Number of Hedge Fund Holders: 38

Upside Potential as of March 31: 25.43%

Average Analyst Price Estimate: $19.14

SentinelOne, Inc. (NYSE:S) is a systems software company based in Mountain View, California. It provides AI-powered autonomous threat prevention, detection, and response capabilities through its Singularity Extended Detection and Response Platform.

Rob Owens, an analyst at Piper Sandler, holds a Neutral rating on SentinelOne, Inc. (NYSE:S) shares as of March 15.

The average price target placed on SentinelOne, Inc. (NYSE:S) shares by Wall Street analysts is $19.14, while the shares were trading at $15.26 on March 31. This gives the stock an upside potential of 25.43%.

SentinelOne, Inc. (NYSE:S) was found among the 13F holdings of 38 hedge funds in the fourth quarter, with a total stake value of $731 million.

1. EPAM Systems, Inc. (NYSE:EPAM)

Number of Hedge Fund Holders: 35

Upside Potential as of March 31: 38.58%

Average Analyst Price Estimate: $407

EPAM Systems, Inc. (NYSE:EPAM) is a provider of digital platform engineering and software development services. The company is based in Newtown, Pennsylvania.

James Friedman at Susquehanna holds a Positive rating on EPAM Systems, Inc. (NYSE:EPAM) shares as of March 27, alongside a $410 price target.

EPAM Systems, Inc. (NYSE:EPAM) has an EV/Sales (TTM) ratio of 3.19, showing how the shares at trading below their intrinsic value. Wall Street analysts also placed an average price target of $407 on the shares, which were trading at $293.69 on March 31. This gives the shares an upside potential of 38.58%.

There were 35 hedge funds long EPAM Systems, Inc. (NYSE:EPAM) in the fourth quarter. Their total stake value was $432 million.

Harding Loevner, an asset management company, mentioned EPAM Systems, Inc. (NYSE:EPAM) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“As was the case in the fourth quarter, IT investments detracted most. Eastern European IT servicing firm EPAM Systems, Inc. (NYSE:EPAM) plunged in the first quarter as a general sell-off of expensive, high-growth stocks was compounded by its specific business continuity risk: nearly 60% of the company’s workforce was based in Ukraine, Belarus, and Russia at the start of the Russia-Ukraine conflict. The company navigated the crisis well, relocating many of its engineers out of the impacted region, while retaining most of its existing customers and winning new ones. Shares have rebounded modestly over the course of the year, although not sufficiently to offset the initial sharp decline.”

See also 15 Best Artificial Intelligence (AI) Stocks to Buy and The Future of Artificial Intelligence