2 Undervalued and Overlooked Artificial Intelligence (AI) Stocks With Long-Term Upside

While "undervalued" and "overlooked" are two adjectives that aren't often used to describe AI stocks (they're normally the opposite), there are plenty of stocks that can take on this moniker

Many times, these are companies that investors assume will be disrupted by the AI arms race but are leaders in their respective fields

Both of these stocks are undervalued and don't get enough credit for the work they've already done in the AI field

As a result, they look strong buys, especially at their current price

Image source: Getty Images

The market thinks both companies will be losers in the AI revolution Alphabet and Adobe are two companies that everyone assumes will be losers, but they're also AI leaders in their respective fields

Investors need to examine the lihood of either company falling behind in the AI arms race rather than making assumptions, as both companies have impressive AI offerings that are often overlooked

Alphabet is the parent company of Google, and gets the majority of its revenue from the Google engine

The market assumes that generative AI models will replace Google, but this has not yet come to fruition

That's not indicative of a company that's losing a ton of from generative AI defectors

Furthermore, Google has a leading generative AI model in Gemini and is also benefiting from the AI arms race with its cloud computing, Google Cloud

Google has also implemented AI overviews, which bridge the gap between traditional Google and generative AI models

This combination is ly all that the majority of internet users want from AI, and assuming that Alphabet's is going to significantly decline is a gross misvaluation of the current environment

Generative AI tools can also generate images and, something that Adobe's duct line has long been a part of creating and editing

If all graphics are created by generative AI, then Adobe's software becomes useless -- at least that's the bear case

In practice, generative AI-created images are impressive but don't offer the exact control that many graphic designers want over the end duct

Generative AI will ly take over image creation for some lower-end tasks

Still, when a company wants absolute control over colors, duct images, and other design aspects, Adobe's tools are the best for the job

Adobe also has its own generative AI model, Firefly

This is an incredibly AI tool for designers because it's optimized to integrate with Adobe's existing duct suite

Time will tell if Adobe can maintain its competitive edge against generative AI models

Still, with Adobe's consistent growth quarter after quarter, even with generative AI tools available for use, I think it will be just fine

This indicates that these two stocks are massively undervalued compared to the broader market

If you think that AI will significantly disrupt both companies, then this valuation ly makes sense

However, if you examine the recent results of both companies and consider the AI tools they are offering, it becomes that this assumption is incorrect

Each stock is an excellent buy at this time

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors

Keithen Drury has positions in Adobe and Alphabet

The Motley Fool has positions in and recommends Adobe and Alphabet

The Motley Fool has a disclosure policy.