Whereas big companies have already reaped the benefits of increased spending on AI, some companies are posting compelling valuations and becoming attractive investments.
undervalued AI stocks to buy for future growth
reported Q1 2025 revenues of RMB32.5 billion which was a 3% year over year increase. Baidu Core was a significant contributor bringing in RMB25.5 billion (up 7%) which was primarily driven by AI Cloud revenue growth of 42%. The company's net income surged 42% year over year to RMB7.7 billion with a diluted EPS of RMB21.59 (US$2.98). Adjusted EBITDA stood at RMB7.2 billion representing a 22% margin.
Operational highlights included the launch of ERNIE 4.5 and ERNIE X1 models, Apollo Go’s international expansion to Dubai and Abu Dhabi (1.4 m rides in Q1, +75% YoY), and Baidu App MAUs reaching 724 m (+7%). Management reaffirmed its AI‑first strategy, citing strong market adoption of cloud and autonomous mobility platforms, supported by a robust RMB159 billion net cash position.
Taiwan Semiconductor Manufacturing Co. (NYSE: TSM)
reported robust Q2 2025 results with revenue reaching NT933.8billion (US30.1 billion). This represents a significant 38.6% year over year increase and a 17.8% rise quarter over quarter which was largely fueled by strong demand in the AI and High Performance Computing (HPC) sectors. Net income surged 60.7% year-over-year to NT$398.3 billion. Diluted EPS stood at NT$15.36. The company also maintained excellent profitability. It achieved a gross margin of 58.6%, an operating margin of 49.6%, and a net margin of 42.7%.
Advanced technologies (7nm and below) contributed 74% of wafer revenue, with 3nm at 24% and 5nm at 36%. Looking ahead, Q3 revenue is guided at US$31.8–33.0 billion, with gross margin of 55.5–57.5% and operating margin of 45.5–47.5%, underscoring sustained AI‑driven growth momentum.
Marvell Technology, Inc. (NASDAQ: MRVL)
reported Q1 FY26 revenue of $1.90 billion which was up 63% YoY driven by strong AI-related data center demand (+76%) with additional growth in carrier infrastructure (+93%), enterprise networking (+16%) and consumer (+50%). Automotive/industrial declined by 2%. Net income was $177.9 million (diluted EPS $0.20) versus a $215.6 million loss YoY. Gross margin expanded to 50.3% from 45.5% and operating margin reached 14.3%.
The company announced the $2.5 billion sale of its automotive ethernet unit to Infineon (closing expected in CY25) to sharpen focus on AI and cloud infrastructure. Marvell generated $333 million in operating cash flow, repurchased $340 million of stock and paid $52 million in dividends with $2.2 billion still authorized for buybacks. Management highlighted accelerating AI momentum while balancing restructuring actions to optimize portfolio investments.
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