The Motley Fool, a service specializing in investment analytics and financial advice, picked three AI companies for investors who emulate Warren Buffett's strategies. He's known as a stickler for the value approach and believes it's smarter to buy an excellent company at a fair price than a mediocre one at a very favorable price. However, in the era of the AI boom it is not easy to follow this principle: finding undervalued stocks in an overheated market is not an easy task. Nevertheless, there are such companies. We tell you which stocks made it to the list below.

Which companies made the list

- Micron Technology, which specializes in memory and storage devices. Since the beginning of the year, Micron shares have risen 37%, while the main U.S. stock index, the S&P 500 has added only 2%. In 2024, Micron was the first to introduce the most compact memory chip available on the market. The small size allows more components to be placed, making devices faster and more powerful - this is especially important for AI-enabled mobile solutions. The popularity of Micron's products in the AI space is growing rapidly, with revenue from HBM (high bandwidth memory) chips surpassing $1 billion for the first time in the second quarter of fiscal 2024. Total revenue for the quarter was $8.1 billion (up 40% from $5.8 billion a year earlier), and net income doubled to $1.6 billion in the same period.  

- Another company is Dell Technologies, which sells servers, PCs and other equipment for building AI systems. And while Dell's stock is down more than 3% since the beginning of the year, Wall Street analysts on average predict it will rise by a quarter. Dell's customers include AI company CoreWeave. Despite intense competition, demand for AI hardware is growing rapidly, and Dell is aggressively building market share, notes The Motley Fool. In the first quarter of fiscal 2025, Dell's revenue grew 5% to $23.4 billion. «We saw exceptionally strong demand for AI-optimized servers,» Chief Operating Officer Jeff Clark stated at the end of the quarter. In the first quarter alone, orders for AI hardware exceeded $12.1 billion - more than the total shipments for the entire fiscal year 2025. Dell's revenue is expected to grow to at least $101 billion in fiscal 2026 (versus $95.6 billion a year earlier).

- And third is Alphabet (Google's parent company). Its stock is down 6% since the beginning of the year, but Wall Street analysts on average see another 13% upside potential. The company has developed its own AI solutions and integrated them into multiple products, including Google Search and Google Cloud, which is already being reflected in revenue. Integrating AI into search has helped increase user engagement, and Google's revenue reached $50.7 billion in the first quarter of 2025 (vs. $46.2 billion in 2024). Google Cloud revenue also grew 28% year over year, from $9.6 billion to $12.3 billion. Alphabet's total revenue last quarter was $90.2 billion, up from $80.5 billion a year earlier, and earnings per share rose from $1.89 to $2.81.

Alphabet shares came under pressure after losing two antitrust cases initiated by US authorities, but the company's CEO Sundar Pichai noted that the decisions could be challenged and the proceedings could drag on for years. While Alphabet deals with this, AI will continue to support the growth of its business. In 2025, the company will invest $75 billion in AI technology infrastructure - $22.5 billion more than a year earlier.

The three companies named - Micron, Dell and Alphabet - are all businesses with decades of history, sustainable businesses and a strong AI focus, notes The Motley Fool. They pay dividends and fit the image of «great companies» that Buffett loves. Their forward price-to-earnings ratio (12 to 18) is significantly lower than AI giants like Nvidia and Microsoft (33 to 35). So, the relatively low multiples make the stocks of these three players a great choice for investors following Buffett's strategy: play long and buy at a reasonable price, states The Motley Fool.

 

 

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