3 Artificial Intelligence (AI) Stocks That Look Like Great Buys Right Now

Tech stocks have been coming under pressure in recent days as concerns about the war in Iran dragging on and the potential for interest rates to rise higher in the future appear to be weighing on the market as a whole. While some stocks may inevitably go lower, this can be an opportune time for investors to consider loading up on top artificial intelligence (AI) stocks that may only be down temporarily.

Three stocks that may be tempting options to buy on the dip and that have tremendous growth opportunities related to AI are ASML Holding (NASDAQ:ASML), Taiwan Semiconductor Manufacturing (NYSE:TSM), and Broadcom (NASDAQ:AVGO).

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ASML Holding

ASML is a leading tech company that plays an important role in chip manufacturing, as its lithography machines print patterns onto silicon wafers and are integral to the development of advanced AI chips.

The business has been growing fast due to the incredible demand for chips and significant investments in AI. ASML has a strong competitive advantage, and given its importance in AI, I think paying a premium for the stock is certainly justified, which is why it may still be a good long-term buy even at 40 times earnings. Its forward price-to-earnings (P/E) multiple, which is based on analyst expectations, is 29.

This year, the Dutch company expects to generate around 45 billion euros in revenue, an increase of about 38% year over year.

ASML's stock has been declining in the past month and is now down 18% from its 52-week high. For long-term investors, now may be as good a time as any to load up on this top tech stock.

Taiwan Semiconductor

Another tech stock with a tremendous moat and crucial to the chip-making process is Taiwan Semiconductor, which has around a 70% market share in the foundry market, and that share climbs even higher for advanced AI chips.

Despite efforts to produce chips in the U.S. on a large scale, that's not likely to happen easily or anytime soon. Taiwan Semi's expertise and low-cost production make it highly likely the business will continue to dominate the market, which is why this is a no-brainer buy for any AI investor. In its most recent results, which covered the period up until the end of September, the company posted revenue growth of 51%, and earnings rose by 69%.

Taiwan Semi's stock has been declining over the past month, and while it's still up 40% this year, it's a stock worth buying on any dip in value. Currently, it's down just 12% from its high. But with it trading at a forward P/E of 21, its valuation is reasonable given its terrific fundamentals and long-term growth potential.

Broadcom

Chipmaker Broadcom is another top growth stock that could be a terrific option for AI investors to consider right now. It has declined 3% this year, and it's down 32% from its 52-week high.

The business has been growing at an impressive rate of 86% in its most recent period, which ended on Aug. 2. Demand for its custom AI accelerators has been through the roof, and AI semiconductor revenue rose by 221%.

While the stock's high valuation may have been to blame for its struggles despite posting strong earnings, Broadcom's decline since then has brought its valuation back to more reasonable levels. While it's trading at more than 40 times its trailing earnings, its forward P/E is just 19 and is in line with the S&P 500 average.

Broadcom is in great shape to thrive amid investments in AI and as companies seek out custom chipmakers as a way to diversify and bring down costs (as opposed to simply buying Nvidia chips, which are more generic in nature and often much more costly).

While I was hesitant about Broadcom's stock in the past due to its high valuation, I think it looks like a much better buy right now.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.