AI stocks have gone out of style in recent weeks, and while some of the names may have been overvalued, it’s unlikely that an AI bubble is bursting before our eyes.
Not to discount the magnitude of pain that the latest tech plunge has inflicted on investor portfolios, but the S&P 500 hasn’t even officially entered correction territory (that’s a 10% fall from the top) quite yet. Though the Nasdaq 100 is down around 13%, only three and a half months’ worth of gains have been wiped out so far.
Further, recession fears seem unfounded after just one poor jobs report. Though the correction and potential growth scare could entail more pain to come for tech, I’d argue that innovation in AI will keep on pushing forward.
There’s really no stopping the AI train in its tracks once it’s left the station. Recession or not, AI will just keep getting better, more useful, and, perhaps most importantly, more monetizable from here. Here are three AI-focused stocks that may be worth pursuing amid the tech sell-off.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is the AI darling that’s seen its shares rapidly retreat of late. With NVDA stock now down around 23% from its all-time high, the many who missed the boat on the name may have another shot to buy in at a fairly reasonable multiple.
Surprisingly, NVDA stock hasn’t been hit nearly as hard as some of the other semiconductor firms — think Intel (NASDAQ:INTC) after that brutal quarter — out there. With the company continuing to do more than its share of the heavy lifting for the AI boom, there seem to be a handful of reasons to hang on despite recent turbulence.
Though NVDA stock could go either way over the near term, a few analysts are already pounding the table on Nvidia after the latest dip. Oppenheimer’s Rick Schafer, who’s upbeat on the stock, recently noted that he doesn’t see the company losing market share from recent “minor” production delays.
Nvidia mostly seems to be falling for reasons outside its control. As the market lets earnings do the talking (and walking) once again, a rebound for NVDA stock may not be too far off.
Apple (AAPL)
Few companies are in a position to truly shape the future of technology, such as Apple (NASDAQ:AAPL). It has changed the world by “thinking differently” many times in the past. Whether we’re talking about the rise of the Mac, iPod or iPhone, it’s clear Apple knows how to polish and fine-tune emerging technologies for mass audiences.
Up ahead, the next big thing for Apple seems to be AI. Apple Intelligence and ChatGPT could be a match that changes how we interact with our smartphones. Indeed, the possibilities of an Apple Intelligence iPhone are endless. Still, there’s no guarantee that Apple Intelligence will be the big growth booster many are expecting.
The latest Apple Intelligence preview has finally arrived. Still, nothing about the first beta seems truly ground-breaking just yet. Maybe the full release will change that.
In any case, Apple’s AI needs to be as capable as its rivals’, but it also needs to be better, much better, if it wants to grab the AI bull by the horns.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is a semiconductor firm that could single-handedly push PCs into the age of Arm (NASDAQ:ARM) processors. Indeed, Apple’s move into Arm chips has been a successful one. And though Qualcomm’s latest Snapdragon X Elite chips are incredibly powerful and power efficient, the PCs incorporating them have had a handful of compatibility issues.
Snapdragon-powered PCs may have arrived, but many programs aren’t ready for the Arm age. It will take some time for developers to get up to speed with the latest Snapdragon-powered PCs. In any case, Qualcomm’s Snapdragon chip seems like a strong top candidate as PCs look to become better equipped to run AI without having to connect to the cloud.
After shedding 30% of its value since its June peak, perhaps now’s as good a time as any to nibble on the name while it’s going for a mere 14.1 times forward price-to-earnings (P/E). The 2.14% dividend yield is also notable.
On the date of publication, Joey Frenette held a long position in Apple. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
