2 Top Artificial Intelligence Stocks to Buy in August

Key Points

• Micron Technology trades at just 9.2 times forward earnings despite being Nvidia's preferred memory supplier.

• Alphabet runs businesses like YouTube, Waymo, Android, and Google Cloud, giving it many paths to future growth.

• Both stocks look undervalued next to their AI peers despite playing crucial roles in the artificial intelligence (AI) revolution.

• 10 stocks we like better than Alphabet ›

Many artificial intelligence (AI) specialists have seen their stocks skyrocket in the last couple of years. At the same time, some of the best names in the AI boom have been left behind. In particular, memory chip maker Micron Technology (NASDAQ: MU) and online services giant Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) look like fantastic buys right now. Their modest stock valuations don't reflect their massive growth opportunities.

So if you're looking for an AI stock to buy in August, you should give Google's parent company and Micron another look. Read on and I'll get you started.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Micron Technology looks like a bargain right now

The memory chip market is notoriously cyclical.

The handful of leading chip suppliers never seem to be ready when another tech trend results in massive demand for digital memory (smartphones, AI, and increasingly computerized cars are just three examples). Then they build out their manufacturing facilities until the demand driver fades out or the new supply simply grows too large. That's where unit prices drop, the memory industry goes into a mini-recession, and investors wait for the next surge in demand.

You can see these cycles on Micron's stock chart, with a semi-predictable roller coaster ride with peaks and valleys. Importantly, each new top tends to be much higher than the last one.

From that perspective, the AI-driven memory boom has been going on for about two years now. Some of the industry's cycles have seen two-year upswings followed by similar-sized downswings. And Micron's stock has gained 61% in the past two years -- maybe it's time for a correction?

Some market makers sure seem to feel that way. Micron's stock trades at just 9.2 times forward earnings estimates today. Its price-to-earnings-to-growth (PEG) ratio is a minuscule 0.2. As a reminder, a PEG ratio around 1.0 indicates a fair valuation, in terms of proven profits and upcoming growth. Values in Micron's range suggest that investors aren't convinced by optimistic growth targets, or worried about the company's financial future, or both.

But Micron's sales rose by 58% in the past two years, while trailing free cash flows swung from a $4.7 billion negative reading to $1.9 billion of positive cash profits. Micron is the preferred memory provider for Nvidia's (NASDAQ: NVDA) latest and greatest AI accelerators. Modern smartphones ship with lots of extra memory in order to handle their built-in AI functions. In short, the growth catalysts just keep coming.

Micron is playing a very active part in the AI revolution, but the stock is acting like it's just another short-lived upswing. If you believe that AI will drive business growth for years to come, Micron should be on your short list of stocks to buy right now.

Alphabet is playing the long game

Alphabet's stock has gained just 3% in 2025. That's far behind Nvidia's 31%, or even the 8% increase in the S&P 500 (SNPINDEX: ^GSPC) market index.

And in the valuation corner, the Google parent's stock could double in price and still look affordable next to market darlings like Nvidia. That approximate ratio holds firm across many different valuation metrics, from price-to-earnings to cash-flow valuations.

Moreover, I think of Nvidia as a one-trick pony while Alphabet always has another trick up its sleeve. Let me explain.

Sure, Nvidia's pony is an incredibly impressive racehorse that has taken Nvidia's business results to lofty heights in recent years. Still, I wonder what might happen to its high-flying stock if and when another chip maker starts winning large AI system contracts under Nvidia's nose.

I'm not even speculating here. Longtime Nvidia rival Advanced Micro Devices (NASDAQ: AMD) already offers a competitive solution in its Instinct product range. Furthermore, major buyers such as Alphabet and Amazon are designing their own custom AI chips nowadays. I'm not convinced that Nvidia's golden years will last much longer.

Image source: Getty Images.

At the same time, Alphabet was built to last. The online search and advertising market won't be there forever, and the Google parent has been preparing for that sea change since forever. Alright, since 2014. Same thing in this ever-changing tech sector.

Alphabet runs a leading media-streaming platform (YouTube), an early robotaxi specialist (Waymo), and the world's busiest mobile platform (Android). The Google Cloud service isn't dominating its market, but puts up a serious fight while developing cloud-based AI tools.

Looking ahead, the company's next big idea might be medical research, or remote internet access, or maybe something I haven't heard of yet. Either way, Alphabet plans to stick around for decades, and its stock is on fire sale right now. Alphabet is pretty much always a decent buy -- it's just an even better idea these days.

Should you invest $1,000 in Alphabet right now?

Before you buy stock in Alphabet, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $638,629!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,098,838!*

Now, it’s worth noting Stock Advisor’s total average return is 1,049% — a market-crushing outperformance compared to 182% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 29, 2025

Anders Bylund has positions in Alphabet, Amazon, Micron Technology, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, and Nvidia. The Motley Fool has a disclosure policy.