The explosion of interest in artificial intelligence (AI) has caused the valuations of many tech stocks to skyrocket. Palantir Technologies (NYSE:PLTR), for example, trades at more than 170x forward earnings, Tesla (NASDAQ:TSLA) goes for 184x, and CrowdStrike (NASDAQ:CRWD) trades at 111x. These multiples reflect high expectations for AI-driven growth, but they also raise questions about sustainability.
Forward earnings aren’t the only way to value a stock, and perhaps not even the best way, particularly if their projected growth suggests high valuations. The price-to-earnings-to-growth (PEG) ratio, which divides the forward P/E by the expected annual EPS growth rate (expressed as a percentage), provides a more effective lens for evaluating growth stocks. A PEG below 1 often signals undervaluation relative to growth prospects.
The three big AI tech stocks that follow offer some of the lowest valuations based on their expected earnings growth.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) dominates the AI accelerator market with its GPUs powering most large-scale training and inference workloads. Despite a trailing P/E above 50, its forward P/E sits at a more reasonable 27x, which yields a very attractive PEG ratio of roughly 0.8 — well below 1, making it one of the cheapest ways to bet on continued AI expansion.
Demand for NVIDIA’s Blackwell architecture and upcoming platforms remains insatiable from hyperscalers like Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Meta Platforms (NASDAQ:META). Just yesterday, Nvidia announced Japan’s leading national research laboratory, RIKEN, will integrate over 2,100 Blackwell GPUs into two new supercomputers.
Analysts project EPS growth exceeding 35% annually over the next five years, driven by data center revenue that already accounts for over 80% of sales. Sovereign AI initiatives and enterprise adoption further bolster the outlook. With CUDA’s entrenched software moat and limited near-term competition at scale, Nvidia’s growth justifies its price better than almost any other AI name, leaving room for multiple expansion if it hits consensus targets.
Oracle (ORCL)
Oracle (NASDAQ:ORCL) has transformed from a legacy database provider into a serious cloud AI contender, yet its valuation lags peers. The stock also trades at a forward P/E of 27, but with expected earnings growth around 21%, the PEG comes in under 2 — attractive for a company accelerating in generative AI infrastructure.
Oracle’s cloud revenue grew over 20% last quarter, fueled by AI demand for its Gen2 cloud with Nvidia GPU clusters. Partnerships with OpenAI, Meta, and xAI have led to multibillion-dollar deals, while remaining cloud capacity is booked solid for years. The company’s vast installed base of enterprise customers provides a sticky migration path to OCI for AI workloads.
As more firms train custom models on proprietary data, Oracle’s hybrid cloud strengths and low-cost high-performance offerings position it for sustained double-digit growth, making current levels a relative steal in the AI space.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) offers investors exposure to AI chips at a fraction of Nvidia’s premium. While its forward P/E is somewhat higher around 37x, strong projected EPS growth pushes the PEG below 1, signaling undervaluation for a credible No. 2 in data center GPUs.
The MI300 series accelerators are also gaining traction at Microsoft, Meta, and Oracle, with AMD guiding for $5 billion in AI chip sales this year alone. Upcoming MI325X and MI350 products promise competitive performance-per-dollar advantages, while the EPYC CPU line continues taking server share from Intel (NASDAQ:INTC). AMD also just announced this morning it was partnering with Eviden to deliver France’s first –and Europe’s second — exascale supercomputer using AMD’s EPYC “Venice” CPUs and Instinct MI430X GPUs.
Analysts see EPS compounding at 44% annually over the next five years as AI inference shifts toward cost-efficient alternatives. With a diversified business including gaming and embedded, plus the Xilinx acquisition adding FPGA AI capabilities, AMD provides leveraged upside if it captures even modest market share from the leader.
In a market paying extreme multiples for AI hype, these three stand out for delivering real earnings growth at reasonable prices relative to that trajectory.