2 Oversold AI Stocks to Buy this Earnings Season

Oversold markets are rare.

They create rock-bottom bargains.

Couple this with explosive earnings, and you have a cocktail with big upside potential.

Here are 2 oversold AI stocks to buy this earnings season.

Equities have had multiple headwinds lately:

First, our trusty Big Money Index (BMI) reached a rare oversold signal.

Slowly, our data has begun to get more constructive as the BMI has been marching higher as outflows slow.

Second, we’ve been on record describing weak seasonal trends during mid-term election years.

Markets tend to fall into the vote and rise later in the 4^th quarter.  

The setup bodes well for oversold companies reporting earnings that are above Wall Street consensus.

Today we’ll dive into 2 core AI stocks that raised the bar recently…and trade at cheap valuations.

This combo rarely comes along.

2 Oversold AI Stocks to Buy this Earnings Season

Great stock opportunities have 3 attributes:

• The business opportunity needs to be massive
• Earnings must be accelerating
• Flows are supporting the shares

Few companies will boast these measurable traits.

Our first oversold AI stock to buy this earnings season is Western Digital (WDC). The $150 billion market cap player manufactures hard disk drives (HDD) which are critical to data center storage needs.

Shares have suffered recently, down 50% from their peak earlier this year. The forward price to earnings ratio has dropped to an attractive 13 times.

This is one of the lowest valuations for WDC all year:

Couple this valuation with their recent earnings announcement and the oversold picture illuminates.

Their latest Q1 earnings report was a stunner with revenues reaching $4.38B vs $4.14B estimates . EPS clocked in at $4.64, well above estimates of $4.11.

The company highlighted how demand remains very strong and the supply-demand gap won’t ease near-term.

This aligns with the company’s Q2 guidance raise.

Second quarter sales are seen reaching $5.1B +- $100MM vs street estimates of $4.57B.

Folks, the AI trade is not dead…it’s oversold.

Look how continuous inflows sent the shares soaring earlier this year.

Relentless fears of an AI slowdown that triggered this summer has caused WDC to record a handful of outflows.

Given the cheap valuation and powerful earnings growth, this name is an oversold opportunity.

Once ballast returns to memory and storage names, WDC should begin to rally hard.

Let’s do another.

Our number 2 oversold AI stock to own this earnings season is Corning (GLW). The $114B glass maker is a core leader in the optical space.

AI data centers move massive amounts of data.

Corning manufactures the optical highway for AI.

As data centers find limitations in copper, Corning’s technology improves the amount of data transmitted.

The stock has come under immense pressure, falling 50% from highs.

Back in June the stock reached $255 with a forward PE of 69 times.

Today the shares trade at $131 with a much more reasonable valuation of 30 times forward earnings:

Why this is an oversold opportunity is 2-fold.

First, their Q3 earnings saw revenues reach $5.08B vs $5.03B estimates. EPS reached $.91 vs the estimated $.88 from analysts.

The company guided Q4 revenues to be $5.25B at the midpoint vs expectations of $5.2B and EPS to $.98 at the midpoint…easily surpassing estimates of $.93.

And the company reiterated their Springboard growth plan which targets annualized revenues of $40B by 2030.

This reads like an oversold opportunity if you ask me.

Next, let’s check on the flows.

GLW shares saw massive accumulation signals in the first half of the year (green bars). Only recently have the shares noted outflows.

To the right shows a handful of Outlier signals with indicates the strong fundamental qualities of Corning’s business.

Once money starts pouring back into AI stocks, expect prior leaders to return to the top of the leaderboard:

This October has proved to be tough for technology stocks levered to the AI buildout.

The earnings picture is in direct contrast to these fears.

CEOs are upbeat on future prospects.

Add to it the midterm seasonal tailwinds that are about to begin…and a rising BMI…and a big oversold bounce is becoming more likely by the day.

Having a process is critical.

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The backlog for AI will last years. Now is a great time to get thematic exposure in the best stocks…validated by the MoneyFlows process.

Our PRO (Annual) subscription now includes access to all 11 Frontiers, and their outlier baskets.

Oversold markets rarely last forever.

Just follow the money!

AND don’t miss my conversation with Jason Bodner where we dive into 5 oversold AI opportunities this earnings season.

It’s a fun one!

Enjoy.