Got $1,000? Here Are the Smartest Artificial Intelligence (AI) Stocks to Buy While the Market Is in Correction Mode.

A stock market correction is defined as a major index declining by 10% or more. A bear market starts when an index falls by 20% or more. However, once a market sinks below those levels, even if it bounces back above those lines, technically it isn't out of a correction or bear until it reaches a new all-time high.

While the broad market S&P 500 (SNPINDEX: ^GSPC) came close to correction territory in recent days, only the Nasdaq Composite (NASDAQINDEX: ^IXIC), the Nasdaq-100, and the Dow Jones Industrial Average (DJINDICES: ^DJI) actually entered it, although all three are back above the 10% down level now. However, the market is notoriously volatile, and those indexes could easily drop below that once again if bad news arrives or investors become pessimistic.

I think there are several compelling stocks to buy right now while the market is still in correction mode, and each of them is down by considerably more than the average stock.

Image source: Getty Images.

Microsoft

Starting with the stock down the furthest from its all-time high, Microsoft (NASDAQ: MSFT) is down more than 30%. That's hard to believe, because Microsoft has only declined by more than 30% once during the past decade. The reasons for its recent slump aren't well known, either.

If you look at its most recent financials, everything looks great. Revenue was up 17%, and cloud computing revenue, which gives investors a bead on the health of artificial intelligence (AI) spending, was up 39%. Net income was up 60% year over year (thanks to a rise in its OpenAI investment), and non-GAAP (adjusted) net income, which ignores increases from OpenAI, among other items, was up 23%.

As for valuation, Microsoft looks incredibly cheap. I prefer to gauge Microsoft's stock using the operating price-to-earnings ratio because that metric does not include gains from the OpenAI investment or losses from one-time write-offs. You'd have to go back to 2017 to find the last time Microsoft's stock was trading below 20 times operating profits.

MSFT Operating PE Ratio data by YCharts.

Microsoft is a steal right now, and investors should load up.

Meta Platforms

Meta Platforms (NASDAQ: META) is in a similar boat. While the market may be concerned about how much it's spending on AI, the reality is that its base business is doing incredibly well and is generating nearly all of the cash flow necessary to fund its planned AI investments.

In the fourth quarter, Meta's revenue rose an impressive 24% year over year. Considering that the majority of this revenue comes from ads on its social media platforms, I think that it's safe to say that AI is having an impact on this business segment.

From a valuation standpoint, Meta's stock is also fairly cheap. Outside of 2023, when the market turned against the stock due to Meta's hefty metaverse spending, its recent valuations are some of the cheapest that the stock has traded at.

META Operating PE Ratio data by YCharts.

I think now is a perfect time to scoop up Meta stock, as it could be primed for upside once the market becomes more aggressive.

Broadcom

Broadcom (NASDAQ: AVGO) is off by about 25% from the high it established in December, but if you listened to management's commentary, you'd be buying shares. Broadcom's most promising business is in designing custom AI chips in collaboration with AI hyperscalers.

These chips have exploded in popularity, and many clients have come up with designs that will be entering production over the next few years. During its last quarter, the division in which that chips business sits generated $8.4 billion in sales. By the end of 2027, management expects its custom AI chips -- also known as application-specific integrated circuits -- to generate $100 billion or more in annual revenue.

Normally, a projected growth trajectory like that would send a stock to new highs. But that has not been the case for Broadcom so far. As a result, I think investors should load up in anticipation of huge upcoming growth.

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