3 Genius Stocks Smart Investors Are Buying Right Now

If you're a smart investor, you've likely been paying attention to the recent sell-off in artificial intelligence (AI) stocks. Wall Street appears to have gotten spooked by the massive amounts that tech sector players are spending to build out AI data centers. The hyperscalers have repeatedly told investors that they view the risk of underspending to be far greater than that of overspending, and the momentum of data center builds is likely to persist for some time. This makes the current market sentiment a short-term trend, which is why I think now is the perfect time to load up on some of the AI stalwarts that will lead the way for the next few years.

At the top of my buying list are Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT), and Nvidia (NASDAQ: NVDA), and I'm confident that these three will crush the market over the next few years.

Image source: Getty Images.

Alphabet

Just a few years ago, the view of Alphabet was that it would inevitably be a loser from the AI megatrend, suffering as the use of chatbots cut into demand for Google Search. But Alphabet flipped that script and quickly became an AI leader. Its leadership in this field has also helped make its Google Cloud platform one of the top places for developers to build AI applications, and its rapid revenue growth rate -- 63% year over year in its most recent fiscal quarter -- backs this up. Alphabet is also seeing strength in its legacy Google Search business, where AI summaries have become a widely used feature.

Overall, Alphabet is becoming a force to be reckoned with in the AI realm, and this makes it a top investment option in the space. The market has been bullish on Alphabet's stock, as it has risen around 15% this year, although that figure was as high as nearly 30% in May before the sell-off began. With Alphabet trading for 25 times expected forward earnings, it isn't the cheapest stock on my list, but it's about where most investors would expect a big tech stock to be.

GOOGL PE Ratio (Forward) data by YCharts.

With Wall Street expecting 21% revenue growth this year and 19% next year, I think this is a great price to pay for the stock, making it a smart buy now.

Microsoft

Microsoft is currently trading at just 20 times forward expected earnings -- notably cheaper than Alphabet.

MSFT PE Ratio (Forward) data by YCharts.

For reference, the S&P 500 (SNPINDEX: ^GSPC) trades for 21.7 times forward earnings, so Microsoft is changing hands at a discount to the overall market. What potential investors need to determine is whether that discount is appropriate or a buying opportunity.

Microsoft Azure is another top platform to build AI applications on, and many AI companies, including OpenAI, choose to train their AI models on it. The Azure segment's revenues grew at a 40% rate during Microsoft's last quarter. Microsoft has also integrated its Copilot AI tool into its business productivity software, which has contributed to another booming AI division. The annual revenue run rate of its AI business rose by 123% year over year last quarter to $37 billion.

Microsoft is in a similar boat to Alphabet, yet trades at a 20% valuation discount to it. This doesn't make a whole lot of sense, so I could see Microsoft's stock rapidly rising in the near future to close that gap.

Nvidia

Chipmaker Nvidia (NASDAQ: NVDA) has led the AI build-out over the past few years, and looks to be doing it again in 2026. Demand for its GPUs and the ecosystem that supports them has never been higher, and with more data center build-outs expected throughout 2030, its revenues should keep growing over the next few years.

For 2026, Wall Street analysts project a strong 82% revenue growth rate, but for 2027, that rate is expected to fall to 41%. However, so far, only 2026's anticipated growth is priced into the stock.

NVDA PE Ratio (Forward) data by YCharts.

This means the market expects Nvidia to revert to a market-average growth rate next year, despite projections that contradict that sentiment. As a result, I think Nvidia is an excellent stock to buy now, as the next year and a half could deliver strong gains for investors.

Keithen Drury has positions in Alphabet, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.