2 Overlooked AI Stocks to Buy Before the Market Catches on

Investors should put Salesforce (NYSE:CRM) and another top AI stock on their buy lists right now.

| More on:

Artificial intelligence (AI) stocks had their moment to shine earlier this year. Though the momentum behind such names has slowed as a part of the September (and now October) pullback, I wouldn’t go as far as to say that the recent stalling in such names is a part of a bubble burst.

Indeed, valuations in some of the hottest AI stocks may have overheated this year. But I don’t think anything touching AI is remotely in a bubble. In fact, there may actually be value to be had with some of the more overlooked plays with exposure to generative AI and the next industrial revolution.

Though even the biggest tech trends can lose you money if you pay too high a price, I think that macro fears and high rates have kept enthusiasm (and AI euphoria) tempered.

As such, I view the latest cooling off of the AI names as healthy, not just for the broader batch of high-tech plays but the entire market. It’s one thing for a stock to move into overvalued territory, but it’s another to surge above and beyond absurd levels, dragging everything higher in a frenzy, only to set the stage for a vicious crash.

AI stocks: Are some finally getting cheap as markets sag into October?

Unlike the cannabis boom and bust, the rise of AI looks more than investable, especially if broader markets keep downtrending going into year’s end. If anything, generative AI and firms that effectively leverage its productivity-enhancing power may be the ones that benefit as the lights dim on the economy.

In this piece, we’ll check out two AI plays that look very compelling right now. Enter enterprise cloud pioneer Salesforce (NYSE:CRM) and learning-management system (LMS) software firm Docebo (TSX:DCBO), two firms that are betting on AI initiatives, which may ultimately help them dig out a wider moat around their businesses.

Docebo

Docebo is a Canadian tech firm that boomed during the pandemic lockdown days. The company, which provides corporate training solutions via its LMS platform, is now well off its highs of over $110 per share hit back in its glory day of 2021. Nowadays, shares go for $55 and change, down 50% from its peak. Still, Docebo is not a name to forget about, as it steadily climbs higher. Year to date, the AI-capable stock is up around 20%.

As the company continues innovating, with AI to help enhance its ed-tech and training platforms, growth will follow, regardless of how hard a recession hits. For now, keep the $1.77 billion mid-cap gem on your watchlist, and it’s a Canadian AI innovator who’s not about to pull the brakes.

Salesforce

Salesforce may not be a stealthy way to play the AI boom, but it is one that I believe has been overlooked compared to its “Magnificent Seven” peers. Indeed, Salesforce may very well be the best non-Magnificent Seven stock to own if you want to benefit from the generative AI revolution.

The company’s extensive suite of enterprise software products (which goes well beyond customer-relationship management nowadays) has a nice moat around it. The Slack platform is incredibly robust, with numerous corporate users aboard. And its Tableau business is a shining star as we move deeper into the AI age, where more of us will need tools to visualize and present data sets.

At 127 times trailing price to earnings, the AI stock looks like a buy, as it sails into 2024 with some pretty compelling AI momentum.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has positions in Salesforce. The Motley Fool recommends Docebo and Salesforce. The Motley Fool has a disclosure policy.

More on Tech Stocks

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »

data analyze research
Tech Stocks

2 Ridiculously Cheap Growth Stocks to Buy Hand Over Fist in 2024

Well Health Technologies is a cheap growth stock to buy for its record-breaking results, massive revenue growth, and profitability.

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

4 Reasons to Buy Kinaxis Stock Like There’s No Tomorrow

Kinaxis stock has a strong past. But there is even more to look forward to from this top tech stock.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

The Future of AI: Best Canadian Stocks to Buy Now

Here are two of the best AI-focused stocks in Canada that you can consider adding to your portfolio before it’s…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

2 TFSA Stocks to Buy Right Now With $7,000

Are you looking for growth stocks that can help you maximize the tax-free withdrawals of the TFSA? This article is…

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy Right Now for Less Than $1,000

Not all tech stocks are the risky investments that many think they are. Which is why we're focusing on the…

Read more »