In This Article:
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(0:30) - Has Any Of The Ai Stocks Become Value Stocks?
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(4:30) - Tracey’s Top Stock Picks
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(21:20) - Episode Roundup: SMCI, VRT, AVGO, NVDA,
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Podcast@Zacks.com
Welcome to Episode #394 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
Tracey has covered the AI stocks on the podcast in the past. She has checked in to see if any were classic value stocks, with low price-to-earnings (P/E), price-to-sales (P/S) or PEG ratios, which combines the P/E and growth.
By late 2024, the stocks, as a group, had gotten expensive and there was little value there.
The DeepSeek Panic
But in late January 2025, Chinese AI start-up, DeepSeek, alleged that its AI product could operate successfully with fewer chips and power. This blew a hole in the current AI system which involved buying thousands of NVIDIA’s high-powered chips, building datacenters, and putting the chips into the datacenters.
What if you didn’t need as many chips and therefore fewer datacenters?
On Jan 27, 2025, the AI stocks sold off on the DeepSeek panic. Some stocks were down over 20% in a single session.
Value investors had to ask, were any AI stocks true classic value stocks, with low P/Es and other fundamentals?
This is the Cheapest AI Stock Right Now
The chip and AI infrastructure stocks fell by the double digits because they would be the most impacted by DeepSeek’s apparent breakthrough. But one stock stood out because the shares had already sold off even before DeepSeek’s announcement.
It’s now even cheaper.
1. Super Micro Computer, Inc. SMCI
Super Micro Computer makes server and rack systems which are used in datacenters. Shares soared in 2023 as the AI Revolution took off.
But in 2024, Super Micro Computer’s accounting firm quit and the company hired an Independent Special Committee to investigate the accounting. In Dec 2024, the company announced that the independent review found no wrongdoing in the accounting practices.
It did recommend replacing the CFO, however. Super Micro Computer did not need to restate earnings results.
But the damage was done to the shares. Super Micro Computer fell 60% over the last 6 months. When the DeepSeek news hit, it was just piling on to the weakness in the shares. It fell another 16% the week of the DeepSeek panic.
Where’s the Value?
Just because a stock sells off, doesn’t mean it’s a true classic value stock. You have to look at the fundamentals.