Forget Palantir (PLTR) — This AI Stock is the Real No-Brainer for 2025

Of all the artificial intelligence stocks, Palantir (NASDAQ: PLTR) might be the one that kicked up the most dust in its meteoric rise.

PLTR shares have seen a 422.26% increase in price within the last 365 days. Despite a perennial pain point in the form of the data analytics company’s high valuation and less-than-stellar macro conditions, Palantir stock is also up roughly 70.17% on a year-to-date (YTD) basis.

That’s awesome news if you bought in at the right time — but at a price-to-earnings (P/E) ratio of 479.64x (yep, that’s not a typo), PLTR is simply too risky to invest in right now.

You might have automatically shifted gears toward Nvidia (NASDAQ: NVDA) — but the chipmaker’s 2.88% gain since the start of the year doesn’t really inspire confidence.

And yet, AI remains a huge narrative — capital expenditures earmarked for it haven’t decreased, and interest from investors and the general public alike hasn’t dried up. So, what should you do?

This isn’t a one-off or a unique phenomenon — as the industry continues to mature, we’ll see fewer and fewer of the dramatic moves to the upside we’ve become so accustomed to. 

As some of that dust that has been kicked up settles, the markets will shift away from hype to the minutiae — balance sheets, valuations, return on equity, and other metrics.

Being ahead of the curve for this second phase of the AI boom stands to be quite lucrative, but finding the right investments will require a bit of research.

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At the moment, I think Genpact (NYSE: G) is the best choice on the whole — let me explain why. The company operates in the background and leverages AI to automate and streamline business operations. It might not be glamorous and headline-grabbing, but as it turns out, that can be an advantage.

Let’s get down to the metrics. Our rating system, Zen Ratings, gives Genpact stock an overall rating of A. What does this mean? Simply put, a big-picture analysis of 115 proprietary factors that correspond to above-average returns puts G in the top 5% of equities.

If you’re wondering why this is important, it’s quite simple — backtests demonstrated that a portfolio of A-rated stocks would have provided an average annual return of 32.52% starting in 2003. For reference, the S&P 500 has an average annual return of roughly 10% — so that’s a lot of alpha.

While Genpact doesn’t have the name brand recognition that the two tech giants we mentioned have, it hasn’t actually flown under Wall Street’s radar. The average 12-month price forecast, based on the coverage of 4 analysts, which is currently pegged at $52.50, implies a 24.7% upside.

Now, to backtrack slightly — Genpact stock has seen prices increase by 29.76% in the last year. Sure, those aren’t the sort of jaw-dropping returns we’ve seen with NVDA and PLTR — but it’s both quite good in its own right as well as a sign that there’s likely more room to grow.

G, which is the 3rd highest-rated stock in the Information Technology Service industry, is currently trading at a P/E ratio of just 14.08x. The market average is currently 30.9x — while the industry average is 29.08x.

The stock actually ranks in the top 6% in terms of Value — the market simply keeps undervaluing it, despite 16 consecutive quarters of earnings beats. It also happens to rank in the 93rd percentile in terms of Safety, indicating a stable, mature business model.

Finally, we have Financials and Artificial Intelligence — and in terms of these Component Grade ratings, G ranks in the top 11% and 18%, respectively, of the more than 4,600 stocks that we track.  

To explain the former — Genpact maintains a healthy checkbook with $1.94 billion in short-term assets, and has managed to whittle down its debt in the past five years, bringing its debt-to-equity (D/E) ratio down from 1.8 to 1. As for the latter — a neural network trained on more than two decades of fundamental and technical data suggests it’s a likely outperformer.

So, to sum it up — will G skyrocket, find its 5 minutes of fame, and provide triple-digit returns? Most likely not — but if you’re after a sensible AI stock at a discount, with a proven business model that benefits from a wide variety of applications, you’ve just found it.

—> Click here to research G. If you’re a value investor, you might also want to check out our Low P/E Ratio stock screener.

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