The Most Affordable Megacap AI Stocks to Consider in 2025

What are the most affordable megacap artificial intelligence (AI) stocks to consider buying in 2025? The answer can vary based on how you define and evaluate these stocks.

Many people agree that a megacap stock is any stock with a market capitalization of at least $200 billion. However, identifying the cheapest AI stocks within that category can be more complex. The results will differ depending on the valuation metrics used.

Investors may also have different opinions on which companies qualify as AI stocks. For example, does extensive use of AI count, or must a company actively sell AI-related products? The greatest debate typically arises when trying to find stocks that fit the criteria of being cheap, megacap, and strong AI players worth purchasing this year.

In this analysis, I will use the price-to-earnings-growth (PEG) ratios from analysts' surveys as my primary valuation metric. I will include only companies with significant AI-related products and services. Additionally, I will consider recommendations from analysts as well as my insights to determine which stocks are the best options for investment.

With these definitions established, here is my selection of the most affordable megacap AI stocks to contemplate buying in 2025.

1. Advanced Micro Devices

Advanced Micro Devices (AMD) is just above the megacap threshold with a market capitalization of approximately $204 billion. Initially, the chipmaker may not seem very cheap, with a forward earnings multiple of 24.6.

However, AMD appears to be a bargain if the analysts' five-year earnings growth forecasts are accurate. Its PEG ratio is a low 0.32.

AMD undoubtedly qualifies as an AI stock as its chips power AI applications in both personal computers and data center servers. Furthermore, the company's planned acquisition of AI infrastructure provider ZT Systems will enhance its position in the AI sector.

But is AMD a wise investment for this year? I believe it is. While I don't expect AMD to surpass Nvidia in the AI chip market, the company has solid long-term growth potential. The recent decline in its stock price seems excessive to me.

2. Alibaba Group Holding Ltd.

Alibaba Group Holding Ltd. (BABA) is another company that barely crosses into megacap territory, with a market cap just below $205 billion. However, Alibaba is considered cheap across multiple valuation perspectives.

The stock trades at only 8.9 times forward earnings, and its PEG ratio is 0.57, according to analyst data. Even its trailing price-to-earnings multiple of 17.7 is relatively modest.

Alibaba is often referred to as the "Amazon of China," operating a vast e-commerce platform and serving as a significant provider of cloud services, just like Amazon. However, the comparison weakens when examining Alibaba's growth compared to Amazon's.

I'm cautious about heavily investing in Chinese stocks due to the country's economic challenges and unpredictable government actions towards businesses. Nevertheless, Alibaba offers essential products and services to a large market, raising the likelihood of strong long-term returns for current investors.

3. Broadcom

If there were a category for "mega megacap stocks," Broadcom (AVGO) would undoubtedly belong. The semiconductor and infrastructure software company boasts a market cap of $1.15 trillion, which is nearly double its market cap from one year ago.

At first glance, Broadcom's valuation may appear high, trading at close to 38 times forward earnings. However, its PEG ratio stands at a more reasonable 0.68, indicating analysts expect considerable growth from Broadcom in the coming years.

I share this optimistic view. Broadcom's AI revenue surged by 220% year over year in the last quarter, fueled by demand for its Ethernet networking products and XPU custom AI accelerators. Furthermore, its acquisition of VMware presents new growth opportunities.

Disclaimer: This analysis is for informational purposes only and should not be considered as financial advice. Always conduct your own research or consult with a financial advisor before making investment decisions.

AI, Stocks, Investing