We recently compiled a list of the 12 Best Artificial Intelligence Stocks Under $50 According to Analysts. In this article, we are going to take a look at where HP Inc. (NYSE:HPQ) stands against the other AI stocks under $50.
Franklin Mutual’s Katrina Dudley appeared on CNBC on December 31 to discuss whether the sectors that powered the market’s gains in 2024 will continue to lead the way in 2025, particularly AI within the tech and communications sectors. Companies in these sectors, especially the MAG7 stocks, have experienced remarkable performance over the past year. She pointed out that alongside traditional tech stocks, companies providing essential infrastructure are crucial for supporting the rapid expansion of AI technologies. She expressed strong optimism about AI’s continued influence, stating that it represents a secular theme likely to propel the tech sector forward in the coming year.
When addressing concerns about market valuations, Dudley reiterated that high valuations, such as the S&P 500 trading at ~22 times earnings, should not deter investors. Instead, she argued that these valuations reflect robust earnings growth among technology companies, distinguishing this phase from past market bubbles. The network effects inherent in AI-driven companies contribute to their returns, suggesting that if these firms can exceed earnings expectations, their valuations could become more favorable over time. However, she cautioned that consistent performance is critical. Any failure to deliver on earnings growth could pose risks in a high-valuation environment.
Turning her attention to lagging sectors, Dudley discussed healthcare as an area ripe for AI-driven transformation. She noted that while healthcare has significant upside potential due to demographic trends, some healthcare service providers faced challenges in 2024 due to rising costs and consumer pushback against high pricing. The increased focus on transparency in healthcare pricing may benefit consumers but could complicate profitability for companies. She suggested that advancements in AI technology are enhancing productivity within pharmaceutical research and development. Although immediate benefits may not be visible, she believes that AI’s long-term impact on productivity will make healthcare an increasingly attractive sector for investment.
Dudley’s insights underscore the transformative potential of AI across both tech and healthcare sectors.
Methodology
We first sifted through internet lists to compile a list of the top AI stocks under $50. We then selected the 12 stocks with high analysts’ upside potential and that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of analysts’ upside potential (at least 10%), as of January 2. We’ve also added the hedge fund sentiment for each stock which was sourced from Insider Monkey’s database.
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 laptop, showing off the companys sleek notebook computers and workstations.
HP Inc. (NYSE:HPQ)
Share Price as of January 5: $33.14
Average Upside Potential as of January 5: 11.65%
Number of Hedge Fund Holders: 42
HP Inc. (NYSE:HPQ) is a technology company that provides a range of personal computers and other computing devices, printing solutions, and related technologies to consumers, businesses, and the public sector. It operates under 3 primary divisions: Personal Systems, Printing, and Corporate Investments.
The company’s Personal Systems segment made up ~68% of the total revenue in FQ4 2024, driven by commercial unit sales, particularly those with AI capabilities. HP Inc.’s (NYSE:HPQ) PC portfolio now features AI companions designed to enhance productivity and streamline tasks, such as content creation and file analysis. It also launched the EliteBook X, an AI-powered business notebook, powered by 55 TOPS of NPU performance. This means that its processor can perform 55 trillion operations per second for AI tasks
HP Inc. (NYSE:HPQ) holds the leading market share in AI PCs within the Windows ecosystem, representing a strong competitive position. IDC forecasts a 234% increase in GenAI PC sales by 2027. This aligns with the company’s strategic focus, as PCs accounted for over 15% of its total shipments in FQ4.
Greenlight Capital reported a significant increase in the company stock price in Q2, coinciding with a positive shift in PC sales and the potential for AI-driven PC growth. Here’s what it stated in its Q2 2024 investor letter:
“In addition to gold, we had four material winners in our long portfolio this quarter. HP Inc. (NYSE:HPQ) jumped from $30.22 to $35.02. After seven quarters of declines, PC sales turned marginally positive during the quarter. The industry appears to be in the early stages of an upcycle, perhaps to be enhanced by recently launched AI-enabled PCs that are expected to ramp up over the next several quarters.”
Overall HPQ ranks 12th on our list of the best AI stocks under $50 according to analysts. While we acknowledge the potential of HPQ as an investment, our conviction lies in the belief that AI stocks hold great 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 HPQ but that 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.