- The Nasdaq is rallying towards new record highs amid renewed optimism in tech shares.
- While Nvidia, Microsoft, and Alphabet dominate AI headlines, there are a variety of lesser-known players that are building critical infrastructure for the next wave of innovation.
- For investors seeking AI exposure beyond megacaps, these three stocks represent high-potential plays in underappreciated niches.
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As the Nasdaq rallies back toward record highs, fueled by renewed optimism in tech shares, a trio of underappreciated companies—Dell Technologies (NYSE:DELL), Astera Labs (NASDAQ:ALAB), and IONQ (NYSE:IONQ)—are quietly building the critical infrastructure and breakthrough technologies shaping the next era of artificial intelligence.
While giants like Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL) dominate AI headlines, these hidden gems are leveraging AI to unlock growth in overlooked corners of the market.
Here’s how they’re positioned to defy the spotlight and deliver outsized gains in the months ahead.
1. Dell Technologies: Powering the AI Infrastructure Boom
Dell Technologies, traditionally known for its PCs and enterprise hardware, has emerged as a pivotal enabler of AI infrastructure. The company’s AI-optimized PowerEdge servers, designed to pair seamlessly with Nvidia’s latest GPUs, are rapidly becoming the backbone of global data centers.
Beyond servers, Dell’s high-performance storage solutions, including its PowerScale platform, manage the colossal datasets required for generative AI workloads. Partnerships with major players like Meta (NASDAQ:META) further solidify its role in enterprise AI deployment.
As businesses increasingly adopt AI to improve efficiency and drive innovation, Dell is set to benefit from higher demand for advanced IT solutions and services, positioning its stock for growth in the months ahead.
In addition, Dell offers investors an annualized dividend payout of $1.80 per share at a yield of 1.6%, one of the highest in the tech sector.
Shares currently present a compelling investment case with analysts projecting a 36.7% upside potential and price targets ranging from $115.00 to $220.00 (mean: $150.70).
Source: InvestingPro
DELL stock closed at $110.26 on Thursday, earning the maker of IT hardware and infrastructure technology a valuation of $76.8 billion. Shares are up by 27.3% over the last 12 months.
2. Astera Labs: Solving AI’s Data Traffic Jam
Astera Labs is the hidden architect behind the connectivity revolution in AI data centers. The company specializes in designing critical semiconductors and smart cables that enable lightning-fast communication between GPUs, CPUs, and memory systems. Its Aries Smart Retimer chips, for instance, tackle signal degradation and latency issues in server racks loaded with Nvidia’s H100 GPUs.
Astera’s Compute Express Link (CXL) technology is equally vital, allowing multiple AI accelerators to share memory resources—a breakthrough for optimizing performance in high-density server environments.
With AI workloads demanding 10-100x more bandwidth than traditional applications, Astera’s total addressable market is projected to exceed $10 billion by 2027. As Nvidia and AMD (NASDAQ:AMD) increasingly rely on its expertise to refine their GPU ecosystems, Astera is poised to ride the AI infrastructure wave higher.
Despite current operating losses, Astera Labs maintains a strong Financial Health Score of 2.6/5.0 (GOOD) and has shown significant market momentum with a return of 118% since its March 2024 IPO.
Nonetheless, Astera Labs demonstrates remarkable growth potential with analysts forecasting roughly 39% upside and price targets between $80.00 and $150.00 (mean: $122.53).
Source: InvestingPro
ALAB shares ended Thursday’s session at $88.19, valuing the company at $13.9 billion.
3. IonQ: Quantum Computing’s AI Accelerator
IONQ is a pioneer in the field of quantum computing, working to unlock computing power that far exceeds the capabilities of traditional systems. The company leverages AI to develop more efficient quantum algorithms and optimize the integration between its hardware and software platforms.
Investors are increasingly recognizing the long-term potential of quantum computing, and IonQ’s unique blend of quantum innovation and AI integration positions it as a standout play for future growth.
Though quantum computing remains in its infancy, the market’s growth trajectory is staggering. McKinsey forecasts a $100 billion quantum industry by 2035, with AI integration as a key catalyst.
While speculative, IonQ offers asymmetric upside for investors betting on quantum leaps in AI efficiency. The company’s impressive 232% one-year gain reflects growing market confidence in its quantum-AI integration strategy.
IonQ showcases strong market potential with analysts projecting a 14.7% upside and price targets ranging from $30.00 to $54.00 (mean: $44.33), suggesting continued momentum in the quantum computing space.
Source: InvestingPro
IONQ stock currently trades at $38.65 with a market cap of $8.3 billion.
Conclusion
For investors willing to look beyond the AI mainstream, Dell, Astera Labs, and IonQ offer a compelling mix of overlooked value, technological leadership, and exponential growth potential. As the AI revolution shifts from hype to real-world deployment, these underrated stocks could soon emerge as market leaders.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ). I am also long on the Invesco Top QQQ ETF (QBIG), Invesco S&P 500 Equal Weight ETF (RSP), and VanEck Vectors Semiconductor ETF (SMH).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.