It’s been a tumultuous time for artificial intelligence (AI) stocks recently, with the stock prices of some of the leaders in the field pulling back over the last month or so. However, the recent market volatility has also created potential buying opportunities for long-term investors who know which fallen stock to pick.
Let’s look at three AI stocks that have that potential and are worth a closer look this month.
1. Nvidia
Despite recently reporting another fabulous quarter of huge revenue growth, Nvidia (NASDAQ: NVDA) has not been spared from the recent market sell-off. As of this writing, the stock is now down nearly 25% from its all-time high hit in January. Nonetheless, it remains the company best positioned to benefit from the current race to build out AI infrastructure, where spending is on the rise this year.
Cloud computing companies are leading the way, with Amazon (NASDAQ: AMZN) targeting around $100 billion in capital expenditures (capex) this year for building out its AI data centers, followed by $80 billion from Microsoft, and $75 billion from Alphabet. These aren’t the only companies chasing AI, with Meta Platforms looking at up to $65 billion in capex this year mostly related to AI infrastructure, while a consortium led by OpenAI and SoftBank is set to spend $500 billion over the next few years on AI infrastructure through Project Stargate.
Nvidia is the leading designer of graphics processing units (GPUs), which are used to train AI models and run inference. It has been able to take a 90% share in the GPU market with its CUDA software, the first platform created years ago to let developers program these chips for tasks outside their original purpose of speeding up graphics rendering in video games.
In the years since, it has built out an extensive collection of AI libraries and microservices that set it apart. And while some companies have turned to custom AI chips, they generally use them in conjunction with the more flexible and readily available GPUs.
The recent sell-off in the stock has left it at a very attractive forward price-to-earnings ratio (P/E) of 25.5 times 2025 analysts’ estimates and a price/earnings-to-growth (PEG) of under 0.5 — with PEGs below 1 usually indicating a stock is undervalued.
Content retrieved from: https://finance.yahoo.com/news/3-best-artificial-intelligence-ai-093600233.html.
