New Direction in AI Investment? Study Names '5 Stocks' as Undervalued Hidden AI Plays

The 'Magnificent Seven' U.S. tech stocks have lost their luster in the first half of this year, prompting investors to seek alternative investment targets. Analysis suggests that for investors who believe AI will fundamentally transform business models, there remains an overlooked segment in the market: S&P 500 constituents that have already embedded AI into their core operations but are not widely recognized as 'AI stocks'.

According to a MarketWatch report, reviewing the first half of 2026, large-cap AI-related stocks that long dominated the tech rally have fallen from their peaks, while the relatively stable S&P 500 index rose over 9% during the same period.

The reason, analysts say, is that valuations for most AI-linked companies are excessively high. Their average price-to-sales ratio stands at about 7 times revenue, far above the S&P 500 average of 2.7 times.

Additionally, some companies have engaged in complex financing maneuvers, described as akin to a Wall Street-style 'hot-check' cycle of repeated borrowing.

With mainstream AI stocks overhyped, investors are now searching for alternatives. A study since February this year has surveyed over 130 companies, assessing their level of AI integration, related investments, and actual operational outcomes. The research covers 14 industries and mature firms of various market caps, focusing not on AI suppliers like NVIDIA or Anthropic, but on companies actively deploying AI in operations.

The study finds that about half of the 130 companies show some level of AI application, but most remain in early stages, merely mentioning AI in risk disclosures.

However, five companies stand out. Their significance lies not in being widely seen as AI leaders, but in demonstrating a deep, traceable commitment to AI across regulatory filings, capital allocation, and human resource decisions—far exceeding investor expectations.

These five include a payments network operator, a century-old technology firm, and a little-known fintech company.

Visa (V-US)

The study reports that among all sample companies, the most traceable AI integration is not found in a tech firm but in Visa, the 60-year-old payments network.

Visa’s annual report reveals that 26,000 employees already use AI tools, AI-driven interactions have totaled 261,000, and over 100 internal AI applications have been developed.

In valuation terms, Visa’s recent P/E ratio is around 27x, below the S&P 500 average.

However, Visa faces a potential risk: if AI agents become widespread, consumers may complete shopping and payment processes directly through AI, potentially excluding Visa from traditional checkout pages.

Salesforce (CRM-US)

SaaS company Salesforce is one of the most aggressive firms restructuring its business around AI.

Salesforce has built its entire product suite on an AI platform called Agentforce and has strengthened its position through over $3 billion in acquisition investments.

Simultaneously, the company has laid off thousands of employees while continuing to integrate AI into its customer relationship management (CRM) products. Valuation-wise, Salesforce’s recent P/E ratio is around 18x.

However, Salesforce faces challenges. As AI-native competitors can build similar products at lower cost and faster speed, the company’s long-established competitive advantage is gradually eroding.

While betting heavily on AI is the right strategic move, it remains uncertain whether Salesforce will ultimately win this race.

ServiceNow (NOW-US)

Enterprise software company ServiceNow has invested over $10 billion in AI within a year, including a $2.85 billion acquisition of Moveworks and a $7.75 billion acquisition of Armis. It is currently rebuilding its workflow automation platform with AI.

However, ServiceNow’s recent P/E ratio is as high as 67x, meaning investors are paying a steep premium for its AI transformation, while the results have yet to fully reflect in financial performance.

In other words, the company’s commitment to AI is unquestionable, but execution effectiveness remains to be proven.

Evolent Health (EVH-US)

In this evaluation, U.S. healthcare technology and services company Evolent Health surpasses many large insurers, healthcare systems, and health tech platforms in AI integration.

The company uses AI to assist health insurance plans with prior authorization and clinical decision support, helping insurers determine which medical services to approve and which to deny.

Supporters see this as the future of healthcare administration; critics worry that AI involvement in underwriting could trigger liability and ethical controversies.

Evolent has a market cap of about $654 million, and its stock has fallen 39% over the past year. Its small size makes it difficult for many institutional investors to allocate.

Moreover, the company’s business is highly dependent on partnerships with health insurers. If these partnerships end, operations could be rapidly impacted.

Pagaya Technologies (PGY-US)

Fintech company Pagaya Technologies uses AI to assess consumer loan creditworthiness for banks and financial institutions, acting as an AI-powered credit underwriting platform between borrowers and lenders.

The study notes that Pagaya provides clear disclosures on AI investment and application, ranking higher in AI integration than Goldman Sachs (GS-US) and Netflix (NFLX-US) among the 130 companies evaluated.

Pagaya currently has a market cap of about $1.4 billion, but its stock has dropped 45% over the past year.

However, the company primarily focuses on subprime credit-related lending markets, where default risks rise sharply during economic downturns. While AI can improve underwriting efficiency, it cannot eliminate credit risk.