Investors seeking opportunities in the artificial intelligence (AI) sector are turning to unconventional resources for stock recommendations. Recently, one individual utilized ChatGPT, an AI language model, to identify undervalued AI stocks for consideration in their Individual Savings Account (ISA). The model suggested two prominent companies: ASML and Advanced Micro Devices (AMD). While both firms play crucial roles in the AI landscape—ASML specializing in advanced lithography machines and AMD focusing on chips and servers—there was a notable lack of analysis regarding their current valuations.
Valuation is a critical factor for investors. Investing in promising companies is futile if their stock prices are significantly inflated. Both ASML and AMD are considered strong players in the AI revolution, yet current valuations do not provide a substantial margin of safety for potential investors.
Evaluating Alternative Opportunities
One potential undervalued option for exposure to the AI infrastructure boom is Seagate Technology (NASDAQ: STX). The company has emerged as one of the top performers among the S&P 500 in 2025, driven by a surge in demand for high-capacity storage solutions crucial for cloud computing and AI inference. Recent financial results highlight a strong quarter, with Seagate reporting a notable increase in operating cash flow exceeding $500 million and free cash flow of over $400 million. The company also experienced expanding margins, which now exceed 40%.
Seagate’s valuation appears reasonable, trading at a forward price-to-earnings ratio of approximately 23 times, which aligns with the sector average. However, its forward price-to-earnings-to-growth ratio of around 0.9 suggests that earnings growth potential is not fully reflected in its price. The primary risks for Seagate include execution challenges, particularly with the rollout of its Heat-Assisted Magnetic Recording (HAMR) drives, and competition from firms like Western Digital, which could impact margins and investor sentiment.
Another intriguing option is Dominion Energy (NYSE: D). Positioned at the heart of Northern Virginia’s burgeoning data centre industry, Dominion plays a vital role in supporting the infrastructure necessary for AI and cloud operations. The company benefits from regulated returns on grid upgrades and generation capacity, providing a level of predictability uncommon in AI-related investments.
The demand for electricity in data centres is increasing significantly, making power availability a critical factor in this sector. Reports indicate that Dominion may seek to acquire the Northern Virginia Electric Cooperative, a move that could enhance its footprint in a key market for data centres. Currently, shares of Dominion trade at around 17 times forward earnings, approximately 8% below the sector median, and offer a dividend yield of 4.4%, which is notably higher than the industry average.
While the prospects for Dominion are promising, investors should be cautious about execution risks. The company’s dividend growth has faced stagnation, with a payout ratio exceeding 80%. Additionally, large-scale capital projects must remain on budget and comply with regulatory standards to maintain investor confidence.
Conclusion
Both Seagate Technology and Dominion Energy present intriguing opportunities for investors looking to capitalize on the AI boom. Seagate offers exposure to essential storage solutions, while Dominion provides a stable income backed by predictable growth in a critical infrastructure market. As always, investors should carefully weigh the associated risks against potential rewards when considering their stock picks.
In a landscape where the AI sector is rapidly evolving, insights from unconventional sources like ChatGPT can spark valuable discussions on investment strategies and opportunities.
