Got $1,000? 2 Magnificent Artificial Intelligence (AI) Stocks Down 15% or More From Their Highs to Buy Hand Over Fist

The market is giving investors a few gifts right now. There are several companies whose shares are on sale, and investors should be taking advantage of these deals while they are available. Two stocks down significantly from their all-time highs that look like solid buys are Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Broadcom (NASDAQ: AVGO). Alphabet is down more than 15% while Broadcom is down about 20%.

I don't expect these levels to last for long, as each has several growth catalysts that can push them to new all-time highs before 2026 is over.

Image source: Getty Images.

Alphabet

Alphabet is a major player in artificial intelligence (AI). It's competing with its own large language models, as well as supplying computing infrastructure for others to rent out to run AI workloads and applications. Lastly, it's integrating AI across all aspects of its business, including its legacy Google Search engine. This transition is paying off big-time for Alphabet, as its revenue throughout its business is skyrocketing. Overall, Alphabet's Q2 revenue rose 24% year over year, and its operating margin widened from 32.4% last year to 34% this year. So, Alphabet is not only growing larger but also becoming more efficient.

Alphabet also has a huge paper gain on its balance sheet from a early Space Exploration Technologies (NASDAQ: SPCX) investment, which it may choose to liquidate to fund more data center construction once the lockup period ends. Alphabet is really crushing it right now, and its success is headlined by its cloud computing division delivering 82% year-over-year growth.

Valuing the stock is tricky because Alphabet's earnings have been skewed by its SpaceX profits on paper (which it's required to report as actual earnings). But when valued on operating profits instead, Alphabet has come down significantly from recent highs.

GOOG Operating PE Ratio data by YCharts

I think the stock is a phenomenal investment with a reasonable price tag. Wall Street is also on board, as analysts expect 24% revenue growth this year and 22% next year, which is easily enough to surpass the long-term growth rate of the broader market. With a great future growth story on hand and a valuation that's off its all-time highs, it's a perfect stock to buy now.

Broadcom

Broadcom is emerging as an AI computing powerhouse. While Nvidia (NASDAQ: NVDA) may get most of the attention in this industry, Broadcom is starting to make a name for itself. Instead of making broad-purpose graphics processing units (GPUs) like Nvidia, it's partnering with AI hyperscalers to develop custom AI chips that are tailored to their workloads. The best example of this is the Tensor Processing Unit (TPU) designed in collaboration with Alphabet. These computing units have become so popular that Alphabet is starting to sell them to others, allowing more companies to benefit from a purpose-built chip.

Broadcom is seeing monstrous growth in its AI semiconductor division, which grew a blistering 143% year over year to reach $10.8 billion in Q2. In 2027, management expects this division to generate more than $100 billion in revenue. That's a rapid and sustained growth rate, and will transform Broadcom into an entirely different company.

If you value Broadcom's stock using next year's earnings (to account for the huge growth it anticipates), the stock trades for less than 20 times next year's earnings.

AVGO PE Ratio (Forward 1y) data by YCharts

That's a pretty reasonable price to pay for a company that Wall Street expects to put up 66% revenue growth this year and 63% growth next year. As a result, I think Broadcom is one of the top stocks to load up on now, as it will have significant growth that will push the stock to new heights.

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