Markets have remained strong in 2024 primarily because of two factors: the emergence of AI stocks and expectations of multiple Fed rate cuts this year.

However, inflation remains high while other economic signals indicate a strong economy overall. The result is that the Fed can wait to cut rates. In fact, it may. The timeline continues to be pushed back with some pundits suggesting that there may be zero rate cuts in 2024.

That leads me to believe that investors will redirect their optimism into AI stocks. Those shares will not have the benefit of immediately lower lending rates, however, they benefit from optimism. That optimism suggests that AI is only beginning as a long-term opportunity that will fundamentally change the economy.

Investors are likely to refocus on the benefits of AI as Fed rate cut hopes dwindle. That should spike demand and prices. 

Nvidia (NVDA)

Nvidia (NASDAQ:NVDA) recent stock correction is likely to be an opportunity for multiple reasons. First of all, it’s not very serious, and more likely a reflection of current headwinds overall.

Those headwinds include factors like later than expected rate cuts and increased competition from rivals including Intel (NASDAQ:INTC).

Let’s focus on the latter part of those two factors. Intel just released its latest AI chip called Gaudi 3. Intel claims that the chip is faster and more efficient than Nvidia’s leading H100 chips. It very well may be but the problem is going to be sales. It will be very difficult for Intel and other chip makers to disrupt Nvidia’s dominance. Nvidia did not become the most coveted chip maker by chance. Further, Nvidia is scheduled to release its h200 GPU chips this quarter. Those chips are likely to be superior to Intel’s Gaudi 3 chips. Beyond that, Nvidia is by far the better stock given how successful the company has been in turning AI into earnings. Those earnings jumped by 486% in the December quarter.

Meta Platforms (META)

Meta Platforms (NASDAQ:META) has performed exceptionally well over the past year and rebounded very strongly. The company was among the biggest losers during the quantitative tightening era between late 2021 and late 2022. 

However, Meta Platforms has rebounded. That rebound can be partially attributed to its investment in its Llama AI platform. To be clear, the majority of the rebound is due to the return of advertising revenues that underpin Meta Platform’s business model. 

These days, Meta Platforms’ Llama AI model is gaining steam. The firm is set to release Llama 3, the newest iteration of its large language model (LLM). Meta is releasing Llama 3 likely within the next month. 

Llama 3 has the potential to be revolutionary. Meta says that the upgrade will be capable of reasoning and planning. That suggests AI is becoming more human overall and  utilitarian. In turn, Meta should be able to better monetize AI, improving its stock as a result. This makes it one of those AI stocks to consider.

Palantir (PLTR) 

Palantir’s (NYSE:PLTR) AI prowess and profitability are a potent mix. Again, I believe investors are likely to refocus their capital into AI stocks as the Fed rate cut timeline extends. 

The company is well noted for its AI platforms. Palantir’s ability therein has caused the stock to rise. Palantir is  deserving of the attention it has received due to its fundamental strength. The company has reported five straight quarters of GAAP profitability. 

Investors should look to Palantir for its fundamental success. They should also note that Palantir is quickly shedding its public side reputation and becoming a more commercial, private side endeavor. Commercial revenues grew by 32% in the most recent quarter. Meanwhile, government revenues, still high, grew by 11%. This makes it one of those AI stocks to buy.

Furthermore, Palantir recently partnered with Oracle (NASDAQ:ORCL) moving some of its foundry workloads to the latter firm. The partnership suggests that both Palantir and Oracle are deeply interested in western interests moving forward. The point here being that Palantir is the first choice in regard to that issue and AI. 

Micron (MU)

Micron (NASDAQ:MU) stock is very clearly poised to continue heading upward on AI tailwinds. The company is gaining a lot of attention of late for its memory prowess. Its high bandwidth memory (HBM) has quickly become a vital component in the AI race.

Micron was selected as a critical HBM supplier to Nvidia which is an excellent reason to   assume further growth will follow. High bandwidth memory is used to increase the power of AI chips. It is easy to see why Micron then has such a strong opportunity given its connection to Nvidia. 

Micron is also benefiting from the premiums associated with that relationship. The company announced that it plans to raise the prices on DRAM and SSD by 25%. Micron is already coming off a stronger than expected quarter and with its new found Nvidia Jr. moniker, is expected to rise much higher. The company should continue to look more attractive as a refocus on AI monetization re-emerges in the wake of recent Fed news.

AMD (AMD)

Those slower than expected rate cuts should benefit AMD (NASDAQ:AMD) stock in the near term.  investors are well aware of the narrative that underpins investing in AMD: the company is the primary competitor of Nvidia for AI chips.

AMD offers a balance of comparable chip specifications at much lower prices. It continues to beg the question: will Nvidia’s perceived dominance soon be perceived as greed? The answer is maybe.

If some sort of seismic shift occurs and tech firms suddenly switch to AMD chips then of course its shares will move much higher. For now, AMD is simply a strong alternative to Nvidia and the company with a huge opportunity ahead.

CEO Lisa Su predicts massive growth in AI data center chip opportunities in the next few years.  AMD’s  chips are in demand for such applications. That is still the best reason to buy AMD even if the company does not surpass Nvidia. 

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) is one of a select few companies that doesn’t have to worry much about Fed rate cuts. It is of course also one of the strongest AI stocks overall. I do believe that there will be a refocus on AI as mentioned above. and I do believe that will benefit Microsoft.

So, let’s first talk about the initial claim that Microsoft doesn’t have to worry much about Fed rate cuts.  That’s true, one of the primary reasons firms are interested in rate cuts is that lower lending rates emerge following any cut. Lower lending rates spur investments in growth opportunities and so on and so forth.

However, Microsoft is exceptionally cash rich. So, the company can simply chase opportunities as it sees fit without having to rely on lenders.

That simple truth is yet another reason to consider investing in Microsoft at the moment. The company is of course one of the strongest AI competitors overall. Its investment in ChatGPT has paid off very well. The company does have some issues relating to monetizing its office suite of products but overall is exceptionally strong. 

Amazon (AMZN)

Amazon (NASDAQ:AMZN) benefits from the same operating cash flow strengths as Microsoft. The stock is similarly attractive for that reason. So, I won’t beat a dead horse and instead will focus on Amazon’s primary AI opportunity which is its cloud network, AWS. 

Cloud computing has traditionally accounted for a major portion of Amazon’s business. However, demand slowed last year as corporate partners slowed their spending. Amazon is looking for ways to strengthen its AI prowess. The company recently invested an additional $2.75 billion into AI startup Anthropic. That raises its total investment to 4 billion  invested in additional 2.75 billion into AI startup anthropic. that raises its total investment to $4 billion overall. This helps to make it one of those AI stocks to buy.

Anthropic’s Claude AI assistant rivals that of ChatGPT. It’s clear that Amazon hopes to mimic the success of Microsoft in that regard. Overall, Amazon is well positioned as the largest cloud provider. AI investment into cloud workloads is set to strengthen and will benefit Amazon overall.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.