AI Stock Sell-Off: The 5 Best Stocks to Buy Right Now

Artificial intelligence (AI) stocks have been ground zero for sell-offs recently. Several stocks are well off their all-time highs, and almost every one of them has seldom been this cheap over the past few years. I think now is an incredible buying opportunity for AI stocks, and investors should be scrambling to scoop up shares before they recover.

All it will take are some positive earnings reports at the end of the month, or a resolution of the Iranian conflict, to send the market higher, and those catalysts could occur sooner than expected. Investors should wait, because now is a great time to buy many of these stocks.

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The AI hardware providers are looking dirt cheap

Some of the immediate beneficiaries of the AI race are the companies supplying the computing chips needed to compete. In this sector, I think Nvidia (NASDAQ: NVDA), Broadcom (NASDAQ: AVGO), and Taiwan Semiconductor Manufacturing (NYSE: TSM) are the top stock picks. Fortunately for investors, all three of these stocks are on sale. Taiwan Semiconductor is faring the best at nearly 15%, down from its all-time high, and Broadcom is the worst, down around 25%.

However, sell-offs this deep don't happen all that often, and investors shouldn't waste this investment opportunity that comes around only once in a while.

If you've listened to commentary from each of these companies, it's clear that each one believes the AI race will span several years. Taiwan Semiconductor has informed investors that it expects a mid- to high-50% compound annual growth rate (CAGR) from 2024 until 2029 in AI chip revenue. Nvidia believes that global data center capital expenditures will reach $3 trillion to $4 trillion by 2030. Broadcom expects its custom AI chip sales to cross the $100 billion mark in 2027, up significantly from its most recent quarter.

AI hyperscalers aren't slowing down their spending habits on AI computing power just because the market is a bit concerned about total spending levels. Even though the market is worried, it isn't changing reality, which makes these three AI hardware players strong candidates to buy right now. A year from now, I believe investors will look back in awe at the prices they could have bought these stocks for, as each is pretty cheaply priced compared to the growth they expect to deliver.

AI hyperscalers are cheap, too

Moving to the companies actually spending the money, Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META) also look like solid buying opportunities. The market is concerned about how much money each of these companies is spending on AI infrastructure, but that spending appears to be paying off.

Microsoft's cloud computing platform, Azure, delivered 39% revenue growth during the past quarter. There's a huge opportunity for more growth, as AI demand has proven insatiable. This growth led to an overall brilliant quarter for Microsoft, yet its stock has heavily sold off.

Meta Platforms operates giant social media sites such as Facebook and Instagram, and its AI integrations have been making a huge difference on the advertising side. Meta's revenue rose an impressive 24% during the quarter, showcasing that its upgrades have been worth it. There are still questions surrounding whether all of its investments in the Reality Labs division are worth it. Still, if Meta can bring a consumer device that integrates AI with the world around us, it could have a massive business segment that isn't accounted for.

Both of these stocks have sold off deeply, and each trades for an attractive forward price-to-earnings valuation.

MSFT PE Ratio (Forward) data by YCharts. PE Ratio = price-to-earnings ratio.

It has been a while since both stocks were this cheap, and I think now is the perfect buying opportunity for each of them, as their core businesses are thriving.

Keithen Drury has positions in Broadcom, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.