Joel Greenblatt identifies 4 AI stocks as top positions using his proven value-investing formula

Greenblatt, known for the 'Magic Formula' framework that identifies undervalued high-quality companies, has made 4 AI stocks his largest holdings — signaling he sees both strong business fundamentals and reasonable prices in a sector often dominated by hype.

His Magic Formula screens for two specific metrics: companies that earn high returns on the capital they invest, and those trading at attractive price-to-earnings ratios — filtering out expensive trendy stocks in favor of proven business models.

For individual investors and fund managers, this matters because Greenblatt's track record suggests these 4 AI companies are less likely to crash when market sentiment shifts — they combine genuine profitability with valuations that have room to grow rather than requiring constant stock-price appreciation to justify their worth.