Ken Griffin says we’re “almost certainly” in an AI bubble. Meanwhile, Micron is trading at 12 times earnings. Google is at 16. Is Big Tech dirt cheap?

Of the 50 largest tech companies in the world by market cap, 15 are trading at a PE ratio of 25 or less.

PEs this low for high-quality companies are rare.

If we look at the PE ratio for the Nasdaq 100, we see valuations trending down over the last two years. Overall, PE’s look historically normal, and well below the peak in late 2016.

Zooming in on specific stocks, the deals get even better.

From Memory to Hyperscalers, Cheap Stocks Abound

The memory chip makers have multi-year contracts locking in a significant portion of revenue. And even if their profits fall, their PEs would still be reasonable.

Let’s look at some stocks that are less cyclical: companies like Google, Amazon and Meta.

All are trading for 16-22 times earnings. All are growing earnings in the 10-30% range yearly.

That’s amazing growth at that scale. Buying into growth like that for such low multiples is a rare opportunity.

Not Everything Is On Sale

Not every major tech company is cheap.

Apple is at 40 times earnings. Tesla is over 400! Investors are running toward hardware in hopes it will provide a moat from AI.

The market is not rock bottom. But as a whole, prices are reasonable.

Digging into specific stocks, there are some unusual bargains.

Wrap-Up

The AI trade has a long way to run. But as worries mount, many of the leading companies are surprisingly cheap.

Alphabet or Meta could double without increasing earnings a cent. This would provide an enormous tailwind to markets.

AI today reminds me of medical software when I joined the industry in 2005.

“Am I too late?” I wondered.

I had no idea how early I was. The market kept expanding at warp speed for a decade.

It’s time to stop worrying and love the AI trade.

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