2 Underrated Artificial Intelligence (AI) Stocks to Buy and Hold todayheadline

By now, most investors are familiar with some of the biggest names in the artificial intelligence (AI) game, with Nvidia arguably being the company that has benefited the most from the industry’s recent explosion. Other tech leaders like Alphabet, Microsoft, and Amazon quickly started offering AI-based cloud services and are already seeing tangible results from their efforts.

We could name several others, but two stocks most wouldn’t think of as leading AI companies are Netflix (NFLX -0.27%) and Apple (AAPL 0.10%). Both are among the most prominent corporations on Wall Street, but not so much in the more specific AI niche. And although they aren’t cashing in as much as some of their tech peers from the AI boom, Netflix and Apple should, eventually, benefit from AI.

That’s one more reason both these companies are worth investing in today.

1. Netflix

Generative AI can simplify and speed up many tasks, including content production. It’s easy to see the potential for Netflix, whose content strategy is integral to its success. Netflix’s creations have attracted millions of viewers and won many awards. However, management is being careful with how it approaches the use of AI. The company’s CEO, Ted Sarandos, talked about making movies 10% better in response to an analyst’s question during the first-quarter earnings conference call.

Sarandos pointed out that special effects that would have previously been prohibitively expensive are now accessible on a budget, thanks to AI. So, Netflix can make better movies for less, allowing it to control content production costs in the long run. It won’t make much difference over a quarter or even a year, but as Netflix implements this strategy, it should eventually benefit its bottom line and free cash flow. That’s especially the case as better movies help attract more viewers and engagement.

Netflix’s basic strategy won’t change. AI will only allow it to better do the things it already does, and investors should be excited about that, considering how much growth remains in the streaming industry. True, plenty of competition exists, especially from free or cheap ad-supported streaming services. More will pop up in the future. However, Netflix has adapted to this new environment.

It also offers a cheaper ad-supported subscription option. Furthermore, Netflix has a strong economic moat due to its brand name and network effect, since it has access to data that allows it to steer its content production strategy in a way that makes its platform more valuable. Netflix recently estimated a $650 billion opportunity. Its trailing 12-month revenue is just $40.2 billion. 

Here’s another way to look at the massive addressable market for Netflix. It commands less than 10% of television viewing time among its connected households. As Netflix’s engagement grows, expect the company to deliver better financial results and superior returns over the long run. AI won’t be the main reason why, but it should help.

2. Apple

Apple has faced significant headwinds this year. President Donald Trump’s trade policies could significantly increase the company’s costs, especially since Apple manufactures most of its products in China, which has been Trump’s favorite tariff target. The U.S. and China recently reached a trade deal. Plans for exorbitant tariffs are on hold, though the recent deal features less steep duties on Chinese imported goods. These headwinds have overshadowed every other aspect of Apple’s business, including its quiet AI strategy. The company announced Apple Intelligence — a suite of AI features, especially on its latest iPhones — just last year.

It is still working on introducing many of these features, but this could help lead to a robust cycle of renewals in the next few years. That means stronger revenue growth. Apple internally developed its own large language model to run its Apple Intelligence. The company will likely continue upgrading the technology. There is a somewhat speculative reason to focus on, too. Apple is usually not the first to market with its devices or technologies. The iPhone wasn’t the first smartphone. The Apple Watch was not the first smart watch, nor were the company’s AirPods the first earbuds.

These devices became hugely popular because Apple put its own spin on existing technologies and used its incredibly valuable brand name as a marketing tool. Apple has yet to figure out AI, but in my view, the smart money is on the company doing so eventually. And there are other reasons to consider the stock, none more important than the company’s services segment. Apple has over 2 billion devices in circulation and over a billion paid subscriptions. It has historically introduced new monetization plans, and it will do so again in the future.

Apple’s services segment still made up just 28% of its revenue as of the second quarter of its fiscal 2025, ended March 29. That number should grow over time and help boost the bottom line, since services carry far higher margins. Regarding Apple’s manufacturing problem, the company has the financial flexibility to shift its production elsewhere, including in the U.S. It recently announced a $500 billion investment initiative in the country that will partly shore up local manufacturing capacity.

So, despite recent headwinds, Apple’s AI initiatives, services segment, strong brand name, and still massively popular devices make the stock a buy.