AI Stocks Face Turbulence as Trump's Tariffs Take Effect, but Analysts See Long-Term Potential

Wedbush's Ives discusses what does Trump's tariff policy mean for growth stocks By Investing.com

Investing.com -- Wedbush analyst Dan Ives sees Trump's latest tariff policies as a significant near-term headwind for growth stocks but remains confident in the long-term strength of the AI-driven tech trade. "With Trump's Mexico and Canada tariffs now beginning and China tariffs on deck, investors around the world are entering a very nervous period, especially for growth stocks," Wedbush wrote. The biggest risk, according to Ives, is that the Trump administration accelerates its crackdown on China, particularly on chip exports, following concerns over the emergence of DeepSeek, a Chinese AI startup suspected of using Nvidia's advanced GPUs despite export restrictions. "There is one chip in the world fueling the AI Revolution and it's Nvidia (NASDAQ:NVDA)," Ives noted, warning that "the current export controls around China have been a headwind" and further restrictions could intensify market concerns. Despite the uncertainty, Wedbush believes the AI boom remains intact. "Our view is we are in the midst of the biggest tech transformation trade since the Industrial Revolution with AI and $2 trillion of AI Capex over the next 3 years," the analysts wrote. While tariffs may slow certain areas of growth, Ives argues they are part of a "high-stakes poker" strategy aimed at forcing trade negotiations with China, Canada, and Mexico.

Investors Shouldn't 'Run To The Hills' Over Tariffs: Dan Ives Points To 8 AI Stocks 'To Own' - Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN)

President Donald Trump's tariffs on Mexico, Canada and China went into effect Tuesday. A top tech analyst examines how tariffs might affect technology stocks. The Analyst Takeaways: Wedbush analyst Daniel Ives said tariffs could create a "game of geopolitical poker," but he isn't panicking. "There have been many times over the past few decades that geopolitical tensions and government actions have been a major overhang on stocks," Ives said. The analyst cites wars, international conflicts, policy issues, debt crises, COVID-19, supply chain concerns, and currency battles as factors that have weighed on stocks previously. "With Trump's Mexico and Canada tariffs now beginning and China tariffs on deck, investors around the world are entering a very nervous period especially for growth stocks." Ives encourages investors to take a step back and remember that it was known that some form of tariffs by Trump were going to happen. "It's all about how long it lasts and when negotiations start to get to deals on the table with China, Canada, Mexico and many other countries on reciprocal tariffs." Ives expects Trump's speech to Congress on Tuesday to lay out more plans on his tariffs and the investments being made by tech companies in the U.S. "The biggest risk to this market and AI Revolution trade in the near-term was that Trump takes an aggressive approach to China, chip export controls and broader global policy." Ives said DeepSeek helped accelerate the China policies and the semiconductor sector will likely see increased export controls around China. "There is one chip in the world fueling the AI Revolution and it's Nvidia." The analyst said that in the current AI Arms Race, NVIDIA Corporation NVDA GPUs are "the new gold or oil." Ives said if the tariffs stay in place, "there will be major pain ahead for U.S. consumers." "We caution this is all a game of high stakes poker to get other countries to the negotiating table and will very likely not last for an elongated period of time." Read Also: Warren Buffett Unfazed By Trump's Tariff Threats: Oracle Of Omaha Bets On Mexico, Beer The Tech Winners: The analyst said tariffs aren't likely to slow down the long-term tech trade with AI being the biggest tech storyline since the Industrial Revolution. Ives said tariffs could slow things down in the near-term. Ives calls the following stocks as the winners of the AI Revolution in tech that will "remain the stocks to own." Apple Inc AAPL: $325 price target Amazon.com Inc AMZN: $280 price target Salesforce Inc CRM: $425 price target Alphabet Inc GOOGGOOGL: $220 price target Microsoft Corporation MSFT: $550 price target Nvidia: $175 price target Palantir Technologies PLTR: $120 price target Tesla Inc TSLA: $550 price target "Any weakness is a buying opportunity in our view given the fundamental demand picture." Ives said this is not the time to "run to the hills" and is the time to own the AI winners listed above. Price Action: The Invesco QQQ Trust QQQ, which often serves as a barometer of the overall tech sector, is down 1% to $491.91 on Tuesday. The ETF is down 4.0% year-to-date in 2025 and up 10.3% over the last year. Read Next: Chipotle Ready To Eat Tariff Costs, Won't Charge Customers More: 'We Don't Think It's Fair To The Consumer' Photo: Shutterstock AAPLApple Inc$239.480.61%OverviewAMZNAmazon.com Inc$200.94-1.99%CRMSalesforce Inc$283.32-3.32%GOOGAlphabet Inc$170.961.36%GOOGLAlphabet Inc$169.161.29%MSFTMicrosoft Corp$385.44-0.78%NVDANVIDIA Corp$113.28-0.69%PLTRPalantir Technologies Inc$81.50-2.30%QQQInvesco QQQ Trust, Series 1$491.89-1.04%TSLATesla Inc$267.82-5.91%Market News and Data brought to you by Benzinga APIs

2 Top Artificial Intelligence Stocks to Buy in March | The Motley Fool

Growing adoption of artificial intelligence (AI) remains an attractive long-term opportunity for investors. AI promises to bring substantial increases to productivity that could add an estimated $6.6 trillion to the global economy by 2030, according to PwC. Here are two leading AI stocks to profit off this opportunity. Nvidia (NVDA -5.07%) continues to dominate the market for chips needed to train AI models. Its revenue doubled last year to $130 billion, fueling its share price to record highs. A great quality to look for in a growing company is expanding market potential for its product. This can lead to huge gains for investors, as the company finds new opportunities that grow revenue and profits over many years. Nvidia certainly appears to be a company built to last. Selling graphics processing units (GPUs) to data centers has only recently become its main business. Nvidia's core market for a long time was selling GPUs for running graphics applications on PC, including video games. But the company's founder and CEO, Jensen Huang, has been successful adapting its GPU technology for a range of markets over the last decade. The data center is the hot market right now and may remain so for several years, but Nvidia is starting to see accelerating revenue growth in its automotive segment. Toyota Motors recently announced that it will use Nvidia's DRIVE AGX Orin to power the advanced driving assistance features in its new vehicles. Other automakers, including BYD and Mercedes-Benz, are also using the Nvidia DRIVE platform. Last year, revenue from its automotive segment grew 55% to reach $1.7 billion, which is pointing to a multibillion dollar opportunity. Huang has demonstrated the knack for identifying new markets for Nvidia's technology and capitalizing on them. This will continue to serve shareholders well, as Nvidia is continuing to invest in expanding its addressable market through software, services, and new types of chips. Given these opportunities, the stock seems more than reasonably priced, trading at a forward price-to-earnings (P/E) multiple of 24 times, while analysts project earnings to grow at a compound annual rate of 34% over the next few years. Alphabet (GOOG -4.41%) (GOOGL -4.49%) owns some of the most valuable online properties, such as Gmail, Maps, and Search. It has more than 2 billion users across seven products, and this makes Alphabet a digital advertising behemoth. Its revenue grew 14% last year to $350 billion, mostly driven by advertising. Google has been investing in AI for several years. It's using AI to make its products better, which can ultimately lead to higher user engagement and advertising growth. For example, the company has seen AI Overviews leading people to use Google Search more. AI tools in YouTube are helping content creators make better videos, which has an impact on viewership and advertising. Alphabet's ad revenue grew 11% last year to reach $264 billion. Improvements to its Gemini AI model is also an opportunity to grow subscription services like Google One. For a premium fee, users can use the most advanced Gemini model for writing emails, creating images, and other tasks across Google apps. Google One already has more than 100 million subscribers. Another opportunity to monetize its AI technology is Google Cloud -- one of the fastest-growing enterprise cloud services. There is tremendous momentum in signing up new business commitments, which doubled in 2024. Revenue from Google Cloud grew 30% year-over-year in the fourth quarter, driven by demand for generative AI solutions. Despite these positive indicators of how AI is benefiting Alphabet's business, investors can currently buy the stock at just 19 times this year's earnings estimate. This seems like a steal for a company that Wall Street analysts expect to grow earnings at an annualized rate of 17% in the coming years.

This Artificial Intelligence (AI) Stock Is a "Magnificent Seven" Leader. But Is It a Buy? | The Motley Fool

With a market cap of nearly $3 trillion, Nvidia (NVDA -5.07%) is now one of the most valuable companies in the world. Even after a recent pullback, it remains one of the largest of the "Magnificent Seven" stocks. According to new research from The Motley Fool, Nvidia has gone from "the smallest contributor to the Magnificent Seven, at just 0.8% of the combined value, to the second largest at 18.7%." Since Nvidia supplies crucial components for artificial intelligence (AI), a technology that has caused huge upticks in cloud-computing demand in recent years, the chipmaker is majorly responsible for driving the substantial growth posted by the rest of the cohort in the Magnificent Seven, such as Microsoft. Nvidia is an incredible business with robust demand, but is the stock still a buy even though so many investors are aware of this story? If you've been searching for high-potential growth stocks, keep reading -- it could be a perfect match for your portfolio. One of my favorite Magnificent Seven stocks is Apple. Its rise has been playing out for decades, and the company has continued to evolve. For a while, iPhone sales were the dominant contributor to the company's success. And that product remains its biggest moneymaker. But in recent years, the company has focused more on recurring, higher-margin revenue streams from its services segment. This bucket includes iCloud subscriptions, App Store purchases, and many other intangible goods. Last quarter, services revenue reached $26.3 billion, a 13.9% rise year over year. iPhone sales, meanwhile, fell by 0.8% over the same period to $69.1 billion. Services revenue still pales in comparison to iPhone sales, but this would be missing the point. The former helps create stickiness for its hardware. The more that customers become enmeshed into Apple's ecosystem, the more they will continue to buy the products within that ecosystem -- a huge reason for its rise over the years. Nvidia is arguably in an even more enviable position. The company's graphics processing units (GPUs) are crucial hardware needed to run and train AI models, operate cloud server infrastructure, enable modern video-game play, and much more. In 2006, the company launched CUDA, a developer software suite that allowed end users to customize its GPUs for optimal performance. This was a stroke of genius. Today, many Nvidia chip purchasers have also set up custom environments for those chips to run on, creating a type of stickiness similar to Apple's. So the chipmaker controls both the hardware and the software side of its GPUs. And right now, that competitive advantage is fueling a tremendous surge in demand for its products thanks to one industry in particular. Since the year began, Nvidia shares have lost around 15% of their value, wiping hundreds of billions of dollars off the company's market cap. If you're a believer in most AI market projections, you should be looking at this as a buying opportunity. Demand for crucial components like Nvidia's GPUs is just starting to heat up -- a tailwind that could persist for decades. The consultancy McKinsey released a report last October that predicted AI software and services revenue would grow from $85 billion in 2022 to $1.5 trillion by 2040. And that was just its bear case expectation. Its bull case called for AI revenue to hit $4.6 trillion by 2040. All in all, this will be one of the largest growth opportunities in history. And thanks to its leading market share -- fueled by superior product development and its strategic vendor lock-in effects -- Nvidia is in the driver's seat for much of this growth. Shares are expensive at 22.5 times sales, but if you're patient, holding Nvidia for the next decade or two will make this initial premium look like a bargain in hindsight. Expect significant volatility along the way, but it remains my favorite Magnificent Seven stock for long-term growth investors.

These Are the 8 Best Artificial Intelligence (AI) Growth Stocks to Buy as President Trump's Tariffs Take Effect, According to Dan Ives | The Motley Fool

Analyzing trends in the stock market can serve as a pretty good proxy for the general psyche of investors. Since Donald Trump's presidential victory on Nov. 5, the stock market has moved in just about every direction. In the immediate weeks after the election, the Nasdaq Composite (NASDAQINDEX: ^IXIC) gained as much as 9.4%. In a way, this wasn't too surprising. During his campaign, Trump spent a lot of time pumping up voters over the idea that he would increase domestic manufacturing, strengthen international trade relations, and bring peace to Eastern Europe and the Middle East. Given that rhetoric, I'm not surprised that an index packed with high-flying growth stocks began to climb higher after he clinched the White House. But the Nasdaq has given back all of its gains since Election Day, and then some. As of March 4, the index is actually down roughly 1.2% since Trump gave his victory speech. Moreover, the Nasdaq has dropped by an even more pronounced 7.4% since he was inaugurated on Jan. 20. The market was set moving again this week when tariffs on goods imported from Canada, Mexico, and China were enacted or increased. Let's consider what investors might be thinking and why current market turbulence could present a lucrative opportunity to buy the dip -- particularly in these eight artificial intelligence (AI) stocks. In the last several years, consumers experienced unusually high levels of inflation combined with a rising interest rate as the Fed boosted its benchmark rate to combat those rising prices. However, by the final year of President Joe Biden's tenure in the Oval Office, inflation had cooled considerably, and the Federal Reserve started to ease borrowing costs down again. Nevertheless, on Nov. 5 voters decided that changes in Washington needed to be made -- hence, Trump was elected to return for a second stint as president. In addition, Republicans took control of the Senate, giving them slim majorities in both houses of Congress, and theoretically providing Trump with a clear path to get legislation passed. To look at the trends in the chart above, you'd think investors have changed their minds. The recent market volatility largely revolves around one factor: tariffs. Tariffs are taxes that are placed on imported goods, and are commonly used to protect local manufacturers from foreign competition or to push back against other nations' use of trade practices perceived as unfair. Tariffs on goods from Canada and Mexico were threatened and then paused for a month. But on Tuesday, Trump instituted tariffs on goods from Canada and Mexico, and increased tariffs on goods from China. However, the administration was soon hinting at compromise, so things could change fast. Trump has expressed concerns about Canada, Mexico, and China in relation to issues such as drug trafficking and immigration trends in the U.S. Given that Canada, Mexico, and China are all major trade U.S. partners, the potential results of these tariffs have rattled investors -- causing many of them to begin selling stock out of fear that the U.S. economy will suffer. While I understand that uncertainty can be jarring, and that a retreat to cash or safe-haven investments could be seen as a smart move in these circumstances, savvy investors may want to take advantage of depressed stock prices. When it comes to investing in AI, one Wall Street analyst whom I encourage investors to pay attention to is Dan Ives, the head of global tech research at Wedbush Securities. He frequently travels around the world, meeting with executives and leadership teams of many of the AI landscape's most influential companies. Even better, he often posts the results of his research on social media -- making his insights accessible to everyone. Yesterday, Ives published a note in which he acknowledged that the U.S. is now caught in a game of "geopolitical poker" thanks to Trump's tariff policies. He made it clear that investors should have been expecting some turbulence, as Trump repeatedly spoke of his plans to impose tariffs during his time on the campaign trail. However, Ives went on to assert that these tariffs will "very likely not last for an elongated period of time" -- just as Trump's tariff policies in 2018 and 2019 didn't cause widespread market downturns. There was a good reason why Ives called out those eight companies in particular. When it comes to the cloud computing hyperscalers, Microsoft, Amazon, and Alphabet are projected to spend a combined sum of more than $250 billion on AI infrastructure in 2025. And Apple recently announced that it plans to spend $500 billion in the U.S. over the next four years on manufacturing, AI initiatives, and silicon engineering. All this spending on AI infrastructure should keep sales flowing for Nvidia, which Ives describes as being the company developing the "one chip in the world fueling the AI revolution." Salesforce is competing heavily with Microsoft in a new phase of the AI narrative: agentic AI. While this type of software is still in its early days, Salesforce has a unique opportunity to benefit greatly from rising spending on AI thanks to its tightly integrated ecosystem, which spans sales and marketing, data analytics, and enterprise communication channels. Meanwhile, Tesla has already proven that it is able to navigate the impacts tariffs can have on its ability to source parts and materials for its batteries and cars. During Trump's first term in office, Tesla's revenue growth far outpaced any rises in costs -- leading to prolonged periods of positive cash flow and a soaring stock price, too. Lastly, Palantir has major partnerships with the likes of Oracle, Microsoft, Meta, and Amazon -- many of which are yet to bear fruit. While I'll admit that Palantir's valuation has gotten pricey, the stock has sold off hard during the last few weeks. This could be an opportunity to scoop up shares at a more reasonable price. The core point here is that even though tariffs will bring a lot of uncertainty -- especially in the near term -- AI's biggest players are doubling down on their respective roadmaps. Though headwinds could result from tariff-hiked costs or fractured trade relations, to me, the ongoing rise in spending on infrastructure and R&D suggests that big tech sees these as short-term challenges. Meanwhile, the long-run narrative that the power of AI will transform business operations appears to be strong. While it can be hard to focus on that longer-term picture amid the short-term turbulence, I think Ives is correct that investors need not hit the panic button. As growth stocks continue to slide, long-term investors may want to take advantage of their discounted valuations.

Nasdaq Sell-Off: The 3 Best "Magnificent Seven" Stocks to Buy Now | The Motley Fool

Let's take a look at the three best "Magnificent Seven" stocks to buy on this dip. Chip giant Nvidia is the king of artificial intelligence (AI), as its graphics processing units (GPUs) have become the backbone of AI infrastructure. GPUs were originally designed to speed up graphics rendering in video games, but Nvidia later created a software platform to allow them to be programmed for other tasks. Their high-speed processing power is ideal for high-performance computing (HPC) and AI, and Nvidia's CUDA parallel computing platform in turn helped create a wide moat for the company as it wasn't until about 10 years later that rival Advanced Micro Devices developed its own software platform. By that time, developers had been trained on CUDA, and Nvidia has since expanded its software dominance through CUDA X, a collection of microservices and libraries built specifically for AI and HPC. As such, Nvidia continues to be the biggest beneficiary from increasing AI infrastructure spending. The big cloud computing companies continue to build out AI data centers to keep up with demand, while AI start-ups and established tech companies race to train the best AI models. AI infrastructure spending continues to be on the rise, with the big three cloud computing companies set to spend over $250 billion in AI-related capital expenditures (capex) this year. Despite the growth opportunities ahead of it, Nvidia stock is attractively trading at a forward price-to-earnings (P/E) ratio of below 24 times 2025 analyst estimates and a price/earnings-to-growth (PEG) ratio of under 0.5, with PEG ratios of below 1 considered undervalued. While known as the leading e-commerce company in the world, Amazon's largest business by profitability is its cloud computing unit, Amazon Web Services (AWS). The company created the infrastructure-as-a-service model and today it operates the largest cloud computing business in the world. AWS is also Amazon's fastest-growing segment, with its revenue climbing 19% last quarter. The company is benefiting from customers developing their own AI models and applications on its platform through the help of its Bedrock and SageMaker services. With Bedrock, customers can choose a number of AI models from both Amazon and other companies to customize, while with SageMaker they can train and move these models into production. Amazon has been capacity-constrained and plans to spend $100 billion on AI infrastructure this year to keep up with demand. The company has also developed its own customer AI chip after licensing some technology from Marvell, which when used in conjunction with GPUs helps give it a cost advantage. Meanwhile, its e-commerce business continues to hum along, with the company using AI to help reduce costs, make it easier for third parties to list items on its site, and help buyers more easily find products. Its higher-margin sponsored ad business is also growing nicely. Amazon has a history of spending big to win big and it's no exception with AI. The stock, meanwhile, is trading at one of its lowest valuation in years at a 31 forward P/E. Like Amazon, Alphabet is one of the big three cloud computing companies through its Google Cloud unit. Cloud computing is a high-fixed-cost business, and Google Cloud has recently reached a profitability inflection point now that the business has reached scale. This could be seen in its Q4 results, where Google Cloud revenue jumped 30%, while operating income soared 142%. Similar to AWS, Google Cloud is also benefiting from customers building out their own AI models and applications, and it too has developed a custom AI chip that it says will, when used alongside GPU, help improve inference times and reduce costs. At the same time, Alphabet is a digital advertising juggernaut. Google search is the leading digital advertising platform in the world by revenue, while Alphabet's YouTube streaming platform is the most watched video platform and the world's fourth-largest digital advertising platform. Meanwhile, the company has a big opportunity with AI, which it is using to help improve its search results while also offering "AI overviews" to people using its search engine to find information. With the company historically only serving ads to 20% of search queries, it has an opportunity to create new ad formats to profit from its AI overviews. In addition to these market-leading businesses, Alphabet is also at the forefront of quantum computing and autonomous driving. It will take a long time before either of these two businesses are meaningful profit contributors; however, they have very strong potential over the long term. Trading at a forward P/E of only 18.5, Alphabet stock is in the bargain bin.

2 Reasons the Tech Sell-Off Could Be a Great Buying Opportunity for AI Stock Investors | The Motley Fool

Less than three months after the Nasdaq Composite (^IXIC 0.70%) set an all-time high, the tech-heavy index is on the verge of entering a correction, which is typically defined is a pullback of 10% or more from a recent peak. In fact, on an intraday basis, the index was down more than 10% from peak to trough briefly on March 4, as concerns about new tariffs on Canada and Mexico sent the index down more than 5% over a two-day span on Monday and Tuesday before it recouped some of its losses. It's natural for investors to be feeling some nervousness about tariffs and the current state of the stock market. In addition to what seems like a rapidly expanding trade war, the stock market is also trading at unusually high valuations, meaning that it doesn't take much for stocks to fall. However, for long-term investors in artificial intelligence (AI) stocks, the recent sell-off looks like a great buying opportunity. Here are two reasons why. In the recent earnings season, investors got an update on AI spending from big tech companies like Microsoft (MSFT -0.90%), Alphabet (GOOG 0.88%) (GOOGL 0.88%), and Meta Platforms (META -0.36%). Those companies all promised to increase capital expenditures in 2025, meaning they will spend more on data centers and AI infrastructure -- evidence that the AI arms race is only heating up as these companies and others like them race toward artificial general intelligence (AGI). CEOs like Alphabet's Sundar Pichai and Meta's Mark Zuckerberg have said that the risk of under-investing in AI is much greater than overspending, as these kinds of technological shifts can be all-or-nothing bets for the tech giants. This has played out before. Take the mobile market, for example, which helped make Apple the most valuable company in the world, but left Microsoft locked out in the cold. These companies regard the opportunity in AI to be so big that it's worth spending the tens of billions of dollars necessary to build out the infrastructure to run the AI applications that could be as transformative as the internet. There's another reason to bet on the AI build-out continuing, regardless of what happens in the stock market. All the big tech companies leading the charge in the AI revolution have deep pockets and huge profits. Even a recession would be unlikely to deter them from investing in AI infrastructure, as they don't want to lose out on the next transformative technology. The Nasdaq has fallen nearly 10% from its peak in December, but some AI stocks are down even more than that. Take Nvidia (NVDA 1.92%), for example. The chip giant widely regarded as the leader of the AI boom is down roughly 25% from its peak after the stock sold off in spite of a solid earnings report, and has continued to slide due to concerns around tariffs and a broader economic slowdown. That sell-off has come as Nvidia continues to forecast strong growth and just posted 78% revenue growth in the fourth quarter. For the first quarter, it called for revenue of around $43 billion, representing a growth rate of 65%. Nvidia now trades at a forward price-to-earnings ratio of just 26, which is roughly in line with the S&P 500 (^GSPC 0.55%). For a company growing as fast as it has been, that looks like a downright steal. As a chipmaker, Nvidia faces cyclical risks, but even those seem priced in at that kind of valuation. Similarly, shares of Taiwan Semiconductor Manufacturing (TSM 0.71%), the world's largest semiconductor manufacturer, are down by 18% from their peak earlier this year, making it also look like a bargain after another strong earnings report. TSMC now trades at a trailing price-to-earnings ratio of just 27, which looks like a great price to pay for an industry leader and a company that is a linchpin in the global economy. TSMC also recently pledged to invest in additional $100 billion in U.S. foundries, which should help the company diversify from its base in Taiwan, expand its capacity, and extend its leadership in chip manufacturing. If stock prices continue to drop, stocks like Nvidia and TSMC could become even more appealing buys, as the AI revolution should continue to move forward regardless of what happens with tariffs or the global economy over the short term. For long-term investors, the recent sell-off is shaping up to be an excellent buying opportunity.

AI Stock Sell-Off: 3 Stocks I'm Loading Up On That Could Soar in 2025 | The Motley Fool

Artificial intelligence (AI) stocks have been getting slammed harder than the rest of the market recently as stocks sold off due to fears of a trade war. Many are down in the double digits, while the S&P 500 (^GSPC 0.55%) is down around 6% (at the time of this writing). Nvidia has been the darling of the AI sector of the stock market since 2023. Its graphics processing units (GPUs) power the AI arms race by providing the computing muscle to train and run AI models. Many are concerned that demand for GPUs may fall thanks to the rise of more efficient AI models. However, that worry is contradicted by the amount of money Nvidia's biggest clients said they're spending on capital expenditures. Nvidia is expected to have a fantastic year. Management expects 65% year-over-year growth to $43 billion in the first quarter of fiscal 2026 (ending around April 30). This growth will be fueled by its latest chip generation: Blackwell. Blackwell GPUs offer a massive performance gain over the previous Hopper architecture and can help users make far more efficient AI models. For fiscal 2026 (ending January 2026), Wall Street analysts expect revenue growth of 56%, indicating that the party is far from over at Nvidia. However, how the market is pricing Nvidia's stock indicates that the party is over. The stock trades for less than 26 times forward earnings -- the cheapest it has been in about a year. This is a screaming bargain price tag for Nvidia, and investors should take this opportunity to buy shares of this long-term winner. Alphabet is an even more extreme bargain than Nvidia, as it trades for an unbelievable 21 times trailing earnings and 19 times forward earnings. For context, the S&P 500 trades for 23.9 times trailing earnings and 21.6 times forward earnings, so the broader market is a bit more expensive than Alphabet's stock. This doesn't seem logical, as Alphabet's business (fueled by advertising on the Google search engine) is thriving. In Q4, revenue growth was 12%, and earnings-per-share (EPS) growth was 31%. That's not indicative of a company that should trade at a discount to the broader market. Wall Street analysts project 11% revenue growth in 2025 and 2026, indicating Alphabet has the capability to achieve market-beating growth. Combine that with its cheap stock price, and you have a recipe for a stock that can outperform the market over the next few years. Last is Taiwan Semiconductor, which seems to have fought off any threat of tariffs by announcing a $100 billion further investment in the U.S. to build three fabrication facilities, two packaging facilities, and a research-and-development center. This is on top of the $65 billion the company announced a few years ago, bringing the total investment to $165 billion. Because of this new investment, it looks like it's sidestepped the threat of tariffs, which was a huge weight hanging over the company's head. Considering that the semiconductor fabricator is one of the most important and innovative companies on Earth, it was key to the market to ensure it avoided tariffs. Now that that fear is likely out of the way, investors can focus on how great the company is doing. TSMC projects AI-related chips will grow revenue at a 45% compound annual growth rate over the next five years. The company's revenue growth rate is expected to reach 20% over that same time frame, indicating that TSMC is going to put up massive growth during the next few years. However, the stock trades for a mere 19.8 times forward earnings. This also makes TSMC's stock cheaper than the market, which is hard to understand because of its unique position in the AI arms race. Taiwan Semi is a screaming buy at these price points, and investors should take advantage of the stock while it's down.

2 AI Stocks Down More Than 45% to Buy in March | The Motley Fool

The rise of artificial intelligence (AI) technology offers the promise of wealth-building returns for investors who hold the right stocks. Estimates suggest that the productivity gains driven by AI could add trillions of dollars to the world economy over the long term. After a great run over the last few years, the market's leading AI stocks have pulled back somewhat this year. Investors who remain focused on the long-term market trends could take this correction as an opportunity to set themselves up for greater profits down the road. Here are two stocks trading well off their highs that are worth buying now. SoundHound AI (SOUN 1.99%) is a leader in voice assistant technology, and it's experiencing robust revenue growth. However, after the stock soared in 2024, it is down 49% year to date. Much of that slide took place after an SEC filing revealed that AI chip leader Nvidia had sold its stake in the small company. However, a closer look at the situation indicates that the sell-off was an overreaction that has set up a great buying opportunity. SoundHound and Nvidia have been working together on AI solutions for vehicles. Their partnership was featured at CES earlier this year, and SoundHound will be presenting at Nvidia's upcoming GTC 2025, where it is expected to show demos of its voice assistant technology using generative AI with the Nvidia DRIVE AGX system. SoundHound's top line nearly doubled in 2024, which partially reflects the additional revenue that came from its acquisition of Amelia. This acquisition is helping SoundHound expand its addressable market beyond vehicles and restaurants and into the retail, banking, and healthcare sectors. In Q4, SoundHound also expanded into energy after making a deal with one of the largest electric utilities in the U.S. Its future is looking bright. Management indicated during the Q4 earnings call that the company has a strong pipeline of new opportunities, and it continues to focus on adding new capabilities to its products to increase their value for customers. The company raised its 2025 revenue guidance to a range of $157 million to $177 million, which would be an increase of 96% at the midpoint. Trading at a price-to-sales ratio of 45, the stock looks expensive, but the company should be able to grow into its valuation. SoundHound is a mid-cap company with enormous potential. Its market cap is $4 billion now -- but it could be worth significantly more in 10 years. Tech companies are spending billions to expand their computing infrastructure to handle AI workloads. Statista estimates that the global AI server market will grow from $31 billion in 2023 to $430 billion by 2033, and Dell Technologies (DELL -1.68%) is well positioned to benefit. Dell generates the majority of its revenue from selling PCs and related accessories, but 46% comes from its infrastructure solutions group, which includes servers. The stock is down 46% from the all-time peak it touched in 2024 and off 17% year to date as concerns over tariffs and the impact that trade conflicts could have on Dell's supply chain create near-term uncertainties about the company's outlook. Dell believes it has a resilient supply chain and that it will be able to navigate these obstacles, but its long-term opportunities far outweigh any near-term impacts that tariffs could have on its costs. Dell recently signed a deal with xAI, the creator of the Grok large language model, extending its AI server backlog to $9 billion. The company's infrastructure solutions business grew revenue by 29% in 2024 to $43.6 billion, which offset the weak sales of its PCs. Dell expects revenue and adjusted earnings per share to increase by 8% and 14%, respectively, in 2025, driven by server demand. Dell also continues to grow its sales of traditional servers and storage solutions. Its PowerStore product has experienced strong demand over the last four consecutive quarters. This shows how the company is providing differentiated services beyond simply selling servers, adding value for customers and cementing its leadership in the market. Dell forecasts that the addressable market for AI hardware and services will grow at an annualized rate of 33% over the next several years to $295 billion by 2027. Its PC business should experience improving demand over the next few years as businesses and consumers upgrade to AI-capable PCs. The end of Microsoft's support for Windows 10 could also be a catalyst for stronger PC sales. Importantly, Dell stock is cheap, trading at just 10 times 2025 earnings estimates, and at the current share price, its dividend has a forward yield of 2.2%. This valuation reflects the low expectations for Dell's PC business, but strong demand for Dell's infrastructure solutions is driving double-digit percentage earnings growth, which points to substantial return potential for Dell investors.

Nasdaq Stock Correction: 4 Magnificent Artificial Intelligence (AI) Stocks That Make for Slam-Dunk Buys Right Now | The Motley Fool

Four historically cheap, well-diversified AI stocks are ripe for the picking -- and I'm not talking about Nvidia or Palantir Technologies. Over the last two weeks, Wall Street has sent a stern reminder to the investment community that stocks can, indeed, move in both directions. Following an unwavering rally spanning almost two-and-a-half years, the growth stock-powered Nasdaq Composite (^IXIC 0.70%) officially entered correction territory. As of the closing bell on March 6, the Nasdaq Composite sat 10% below its all-time closing high of 20,173.89, set on Dec. 16, 2024. The hardest-hit stocks over the last two weeks have generally been those that benefited the most during the current bull market rally. In particular, artificial intelligence (AI) stocks have taken it on the chin. The excitement surrounding AI stocks is palpable. Based on estimates from PwC, empowering software and systems with AI gives this technology a $15.7 trillion global addressable market by the turn of the decade. This is a big enough pie that a large number of businesses can emerge as winners. But there's also the realization that every next-big-thing investment trend since (and including) the advent of the internet in the mid-1990s has undergone a bubble-bursting event early in its expansion. All game-changing technologies need adequate time to mature, and the fact that most businesses lack an understanding of how to optimize their AI solutions denotes that this technology hasn't matured yet. It's why I believe market-leading AI stocks Nvidia and Palantir Technologies may not be the best way to invest in this space. Nevertheless, the Nasdaq stock correction has opened the door for opportunistic investors to pounce on four historically cheap, well-diversified, and all-around magnificent AI stocks. The first phenomenal AI stock that makes for a slam-dunk buy with the Nasdaq correcting lower is e-commerce behemoth Amazon (AMZN -0.72%). Although concerns about retail sales might weigh on Amazon stock in the very short-term, this is a company that generates the bulk of its growth and operating cash flow from its ancillary operations. Nothing is more important to its future than cloud infrastructure service platform Amazon Web Services (AWS). AWS is aggressively incorporating generative AI solutions into its platform, which allows its clients to deploy custom AI applications and build large language models (LLMs). Sales growth at AWS has begun reaccelerating, with an annual revenue run-rate of $115 billion, as of the end of 2024. This high-margin segment typically generates more than half of Amazon's operating income despite accounting for just a sixth of the company's net sales. Additionally, Amazon is expected to lean on its advertising and subscription service segments to do some of the heavy lifting. Big content wins, which includes earning the exclusive streaming rights to Thursday Night Football and select NBA games, afford Amazon exceptional ad- and subscription-pricing power. While Amazon doesn't appear cheap using the traditional price-to-earnings (P/E) ratio, it is historically inexpensive relative to its future cash flow, which is a better measure of value for a company that reinvests a lot of its operating cash flow. Amazon stock can be picked up for a multiple of 12 times forward-year cash flow, which is 43% below the company's average price-to-cash-flow multiple over the last five years. Keeping with the "Magnificent Seven" theme, the second AI stock that makes for a no-brainer buy with the Nasdaq Composite correcting lower is Alphabet (GOOGL 0.88%) (GOOG 0.88%), the parent company of search engine Google, streaming platform YouTube, and cloud infrastructure service provider Google Cloud. Similar to Amazon, Alphabet's biggest long-term growth driver is its cloud infrastructure service platform. Based on estimates from tech-analysis firm Canalys, Google Cloud accounted for 11% of cloud-service spend during the fourth quarter, which is behind only AWS and Microsoft's Azure. Giving its customers access to AI solutions via Google Cloud should ramp up revenue for Alphabet's highest-margin segment. But keep in mind that Alphabet isn't levered too heavily to the AI revolution. In 2024, 75% of its net sales came from advertising tied to Google search, YouTube, and Google Network. With Google controlling an 89% to 93% share of internet search over the trailing decade, Alphabet has a good chance to maintain its premier ad-pricing power. Alphabet's valuation also makes sense amid a historically pricey stock market. Its forward P/E of 17 sits roughly 26% below its five-year average, while its multiple of 13 times forecast cash flow in 2026 equates to a 27% discount to its half-decade average. The cherry on top is the company closed out 2024 with a hearty $95.7 billion in cash, cash equivalents, and marketable securities. The Nasdaq stock market correction is the perfect time to look overseas for outstanding AI stocks to buy, as well. China-based internet search giant Baidu (BIDU 1.51%) stands out as a perfect example. Baidu has been China's equivalent of Alphabet's Google search engine for more than a decade. With few exceptions, Baidu has earned a 50% to 85% monthly share of China's internet search over the trailing-10-year period. This makes it the logical go-to for businesses wanting to target Chinese consumers with their message(s), and more importantly provides a healthy sales and profit base that can somewhat insulate it from stock market volatility. Like Amazon and Alphabet, Baidu is spreading its wings in the cloud infrastructure service space within its home market. During the December-ended quarter, non-online marketing revenue surged 18% from the previous year, with AI Cloud given credit for most of this growth. Complementing its cloud platform with AI solutions, including its Ernie LLM, should be a stepping stone that accelerates enterprise cloud spending. China stocks also tend to be cheap given the uncertainties surrounding President Donald Trump's import tariffs, as well as the unpredictability of China's regulators. Despite these added headwinds, shares of Baidu can be scooped up right now for approximately 8 times forward-year earnings. This is a bargain considering the company is sitting on more than $19 billion in combined cash, cash equivalents, and short-term investments. The fourth magnificent artificial intelligence stock that makes for a slam-dunk buy during the Nasdaq Composite stock correction is social media colossus Meta Platforms (META -0.36%). Yes, another diversified Mag-7 stock. While I'll touch on Meta's AI ambitions in a moment, it's critical to recognize that nearly 98% of its net sales last year -- $160.6 billion out of $164.5 billion -- can be traced back to advertising. Meta Platforms is the parent of some of the most-visited social sites on the planet, including Facebook, Instagram, WhatsApp, Facebook Messenger, and Threads. The 3.35 billion daily active users its family of apps attracted in December 2024 help it sustain top-tier ad-pricing power in most economic climates. Though Meta is, first-and-foremost, an ad-driven business with strong cyclical ties to the U.S. and global economy, CEO Mark Zuckerberg is positioning his company to be an AI leader. Meta is one of the few businesses seeing well-defined benefits from the incorporation of AI into its ad-based platforms. Looking further down the line, the company can utilize AI in its virtual reality headsets, as well as in the metaverse. Zuckerberg may appear hesitant when investing for next-big-thing trends, but he has an excellent track record of successfully monetizing new platforms when the right time is right. Lastly, Meta's sub-22 forward P/E ratio remains attractive given its sustained double-digit sales and profit growth rates.

3 Artificial Intelligence (AI) Stocks to Buy in the Tech Sell-Off

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Jose Najarro has positions in Alphabet and Nvidia. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Synopsys. The Motley Fool has a disclosure policy. Jose Najarro is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

Top 8 AI growth stocks to buy amid Trump's new tariffs

Google is reportedly testing a new AI feature to generate passwords for compromised accounts through artificial intelligence. Analyzing trends in the stock market can serve as a pretty good proxy for the general psyche of investors. Since Donald Trump's presidential victory on Nov. 5, the stock market has moved in just about every direction. In the immediate weeks after the election, the Nasdaq Composite (NASDAQINDEX: ^IXIC) gained as much as 9.4%. In a way, this wasn't too surprising. During his campaign, Trump spent a lot of time pumping up voters over the idea that he would increase domestic manufacturing, strengthen international trade relations, and bring peace to Eastern Europe and the Middle East. Given that rhetoric, I'm not surprised that an index packed with high-flying growth stocks began to climb higher after he clinched the White House. But the Nasdaq has given back all of its gains since Election Day, and then some. As of March 4, the index is actually down roughly 1.2% since Trump gave his victory speech. Moreover, the Nasdaq has dropped by an even more pronounced 7.4% since he was inaugurated on Jan. 20. The market was set moving again this week when tariffs on goods imported from Canada, Mexico and China were enacted or increased. Let's consider what investors might be thinking and why current market turbulence could present a lucrative opportunity to buy the dip -- particularly in these eight artificial intelligence (AI) stocks. Things have been changing In the last several years, consumers experienced unusually high levels of inflation combined with a rising interest rate as the Fed boosted its benchmark rate to combat those rising prices. However, by the final year of President Joe Biden's tenure in the Oval Office, inflation had cooled considerably, and the Federal Reserve started to ease borrowing costs down again. Nevertheless, on Nov. 5 voters decided that changes in Washington needed to be made -- hence, Trump was elected to return for a second stint as president. In addition, Republicans took control of the Senate, giving them slim majorities in both houses of Congress, and theoretically providing Trump with a clear path to get legislation passed. ^IXIC data by YCharts. To look at the trends in the chart above, you'd think investors have changed their minds. The recent market volatility largely revolves around one factor: tariffs. Tariffs are taxes that are placed on imported goods, and are commonly used to protect local manufacturers from foreign competition or to push back against other nations' use of trade practices perceived as unfair. Tariffs on goods from Canada and Mexico were threatened and then paused for a month. But on Tuesday, Trump instituted tariffs on goods from Canada and Mexico, and increased tariffs on goods from China. However, the administration was soon hinting at compromise, so things could change fast. Trump has expressed concerns about Canada, Mexico and China in relation to issues such as drug trafficking and immigration trends in the U.S. Given that Canada, Mexico and China are all major trade U.S. partners, the potential results of these tariffs have rattled investors -- causing many of them to begin selling stock out of fear that the U.S. economy will suffer. While I understand that uncertainty can be jarring, and that a retreat to cash or safe-haven investments could be seen as a smart move in these circumstances, savvy investors may want to take advantage of depressed stock prices. Which AI stocks does Wall Street like right now? When it comes to investing in AI, one Wall Street analyst whom I encourage investors to pay attention to is Dan Ives, the head of global tech research at Wedbush Securities. He frequently travels around the world, meeting with executives and leadership teams of many of the AI landscape's most influential companies. Even better, he often posts the results of his research on social media -- making his insights accessible to everyone. Yesterday, Ives published a note in which he acknowledged that the U.S. is now caught in a game of "geopolitical poker" thanks to Trump's tariff policies. He made it clear that investors should have been expecting some turbulence, as Trump repeatedly spoke of his plans to impose tariffs during his time on the campaign trail. However, Ives went on to assert that these tariffs will "very likely not last for an elongated period of time" -- just as Trump's tariff policies in 2018 and 2019 didn't cause widespread market downturns. There was a good reason why Ives called out those eight companies in particular. When it comes to the cloud computing hyperscalers, Microsoft, Amazon and Alphabet are projected to spend a combined sum of more than $250 billion on AI infrastructure in 2025. And Apple recently announced that it plans to spend $500 billion in the U.S. over the next four years on manufacturing, AI initiatives and silicon engineering. All this spending on AI infrastructure should keep sales flowing for Nvidia, which Ives describes as being the company developing the "one chip in the world fueling the AI revolution." Salesforce is competing heavily with Microsoft in a new phase of the AI narrative: agentic AI. While this type of software is still in its early days, Salesforce has a unique opportunity to benefit greatly from rising spending on AI thanks to its tightly integrated ecosystem, which spans sales and marketing, data analytics and enterprise communication channels. Meanwhile, Tesla has already proven that it is able to navigate the impacts tariffs can have on its ability to source parts and materials for its batteries and cars. During Trump's first term in office, Tesla's revenue growth far outpaced any rises in costs -- leading to prolonged periods of positive cash flow and a soaring stock price, too. Lastly, Palantir has major partnerships with the likes of Oracle, Microsoft, Meta and Amazon -- many of which are yet to bear fruit. While I'll admit that Palantir's valuation has gotten pricey, the stock has sold off hard during the last few weeks. This could be an opportunity to scoop up shares at a more reasonable price. The core point here is that even though tariffs will bring a lot of uncertainty -- especially in the near term -- AI's biggest players are doubling down on their respective roadmaps. Though headwinds could result from tariff-hiked costs or fractured trade relations, to me, the ongoing rise in spending on infrastructure and R&D suggests that big tech sees these as short-term challenges. Meanwhile, the long-run narrative that the power of AI will transform business operations appears to be strong. While it can be hard to focus on that longer-term picture amid the short-term turbulence, I think Ives is correct that investors need not hit the panic button. As growth stocks continue to slide, long-term investors may want to take advantage of their discounted valuations. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Microsoft, Nvidia, Palantir Technologies and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, Oracle, Palantir Technologies, Salesforce and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $710,848!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*. Don't miss out on the latest top 10 list, available when you joinStock Advisor.

5 AI stocks to consider buying in March 2025

The rise of artificial intelligence (AI) technology is projected to significantly benefit investors holding the right stocks, with estimates suggesting that productivity gains could add trillions of dollars to the global economy in the long term. After experiencing a strong performance in recent years, several leading AI stocks have corrected in value this year, presenting potential buying opportunities for long-term investors. Five companies notably seeing sharp declines include SoundHound AI, Dell Technologies, Nvidia, Alphabet, and Taiwan Semiconductor. SoundHound AI, a leader in voice assistant technology, has witnessed a 49% drop year to date after its stock surged in 2024. The decline followed an SEC filing which revealed that Nvidia had sold its stake in SoundHound, leading to what analysts describe as an overreaction in the market. SoundHound and Nvidia have collaborated on AI solutions for vehicles, which was highlighted at CES earlier this year. Upcoming presentations at Nvidia's GTC 2025 will showcase SoundHound's generative AI technology using the Nvidia DRIVE AGX system. SoundHound's revenue nearly doubled in 2024, partly attributed to the acquisition of Amelia, which allows for an expansion into sectors like retail, banking, and healthcare. In Q4, the company secured a deal with a major U.S. electric utility, marking its entry into the energy sector. Management has indicated a strong pipeline of new opportunities, raising its 2025 revenue guidance to between $157 million and $177 million, an increase of 96% at the midpoint. While SoundHound's stock trades at a high price-to-sales ratio of 45, its potential growth could justify this valuation in the future. Dell Technologies is poised to benefit from significant investments in AI infrastructure, with the global AI server market projected to grow from $31 billion in 2023 to $430 billion by 2033. Despite a 46% drop from its all-time peak in 2024 and a 17% decline year to date due to tariff concerns, Dell's infrastructure solutions group, which accounts for 46% of its revenue, continues to perform well. The company's infrastructure solutions revenue grew by 29% in 2024 to reach $43.6 billion, compensating for weak PC sales. Recently, Dell extended its AI server backlog to $9 billion through a partnership with xAI, the creator of the Grok large language model. Dell forecasts an 8% increase in revenue and a 14% rise in adjusted earnings per share for 2025, driven by strong server demand. The company also reported robust sales for its PowerStore product and forecasts a 33% annual growth rate for the AI hardware and services market, estimating that its PC segment will improve as consumers and businesses transition to AI-capable devices. Dell's stock is currently trading at just 10 times 2025 earnings estimates and offers a forward dividend yield of 2.2%. Nvidia remains integral to the AI sector, with its graphics processing units (GPUs) providing essential computing power for training AI models. Despite concerns over potential declines in GPU demand, Nvidia expects significant growth, projecting a 65% year-over-year increase to $43 billion in the first quarter of fiscal 2026, driven by its new Blackwell chip generation. Analysts forecast a 56% revenue growth for fiscal 2026, yet Nvidia's stock currently trades at less than 26 times forward earnings, its lowest valuation in the past year. Alphabet's stock appears even more favorable, trading at just 21 times trailing earnings and 19 times forward earnings. In comparison, the S&P 500 averages 23.9 times trailing earnings and 21.6 times forward earnings. Alphabet's robust business model, primarily powered by Google search advertising, showed a 12% revenue growth and a 31% earnings-per-share increase in Q4. Analysts anticipate an 11% revenue growth for both 2025 and 2026, positioning Alphabet as a potential outperformer in the coming years. Taiwan Semiconductor Manufacturing Company (TSMC) has addressed potential tariff threats with a $100 billion investment in the U.S. to establish three fabrication facilities, two packaging facilities, and a research-and-development center, supplementing a previous $65 billion commitment. This strategic move enhances TSMC's standing in the semiconductor industry, which is crucial to current and future AI advancements. TSMC forecasts that revenue from AI-related chips will grow at a compound annual growth rate of 45% over the next five years, while the overall revenue growth is projected at 20% in the same timeframe. Despite its importance in the AI arms race, TSMC's stock is trading at merely 19.8 times forward earnings, indicating it may be undervalued relative to its growth prospects. Disclaimer: The content of this article is for informational purposes only and should not be construed as investment advice. We do not endorse any specific investment strategies or make recommendations regarding the purchase or sale of any securities.

3 Reasons Tech Investors Shouldn't Worry Too Much About Tumbling Artificial Intelligence (AI) Stocks This Week | The Motley Fool

Technology investors had gotten used to a good thing -- positive momentum that seemed unstoppable. Giants in the industry led the Nasdaq to two years of double-digit gains -- and the individual stocks themselves offered shareholders mind-boggling returns. For example, Nvidia (NVDA 1.92%), the world's leading artificial intelligence (AI) chip designer, saw its stock surge 1,600% over the past five years, and Palantir Technologies, an AI-driven software player, advanced more than 800% since its 2020 market debut. And that's just to mention two of the standout players. Many others also generated great gains for investors. Why such outstanding performance? Investors piled into these stocks on optimism about the future of AI, a technology that could join others like electricity or the internet on the list of "game changers." That's because AI offers the potential to save time, energy, and costs for companies -- and even lead to new discoveries. In recent weeks, though, various headwinds weighed on stocks in this dynamic field. Investors worried about U.S. export controls on chips to China, the U.S. implementation of tariffs to three major trade partners, and general uncertainty about the economy. All of this has led the Nasdaq to a decline of more than 7% over the past two weeks as some of its biggest members tumbled. But before you turn your back on the tech sector, hold on. Here are three reasons tech investors shouldn't worry too much about the recent declines in AI stocks. As mentioned, one major theme weighing on the market is President Donald Trump's 25% tariffs on imports from Mexico and Canada and a 20% tariff on imports from China. Tech companies produce many of their parts and products outside of the U.S., meaning they could soon face higher prices. The White House says the tariffs are in response to a flow of lethal drugs into the U.S. and noted that the move was "until the crisis is alleviated." We don't yet know how long the current trade war will last, but this is an initial sign that the tariffs are temporary. So, yes, the tariffs represent a challenge today, but some of the world's biggest and highly profitable tech players such as Nvidia or Apple should be able to manage these times -- and succeed over the long term. As for export controls on chips to China, these may not be temporary, but they might be manageable. Implemented in 2022, they already have reduced Nvidia's sales in that country by half compared to pre-control days, but Nvidia still delivered worldwide triple-digit growth to $130 billion, a record, in the latest fiscal year, showing the problem hasn't been disastrous for earnings. Of course, before investing in a chip player, it's important to see exactly how dependent the company is on China. But if, like Nvidia, it's growing significantly through sales in other parts of the world, the player still may make a great investment. Though the AI boom has already delivered billions of dollars in revenue to companies such as Amazon, Alphabet, and, of course, Nvidia, we actually are in the early days of this hot technology's story. Today's $200 billion AI market is expected to reach beyond $1 trillion by the end of the decade, which offers AI giants a lot of room for growth. It's also important to remember we're still in the infrastructure build-out stage, with cloud service providers expanding data centers to meet demand and customers launching new AI programs. But at the same time, we're advancing into another key growth stage involving the application of AI to real world problems. Here, AI agents, or software designed to solve a complex problem and put a solution into action, are ready to go to work at certain companies, streamlining their operations and boosting revenue. For example, in a call center, an AI agent may handle initial queries and questions. Providers of chips to power and design these agents and companies using them both should benefit from growth as this phase develops. All of this means the AI opportunity is far from over, and many companies should continue generating significant revenue growth. The positive signs, indicating investment and growth, have been piling up in recent weeks. Meta Platforms said it plans to invest as much as $65 billion this year to support its AI initiatives. The company aims to build a data center that's so big it would cover a major part of Manhattan, and Meta will end the year with more than 1.3 million graphics processing units (GPUs), or chips to power AI. OpenAI earlier this year announced the Stargate Project, a project aimed at investing $500 billion over the coming four years to build out the AI infrastructure in the U.S. And Nvidia recently said demand for its new Blackwell architecture was "extraordinary," and the platform generated $11 billion in revenue in its first quarter of commercialization. These are just a few examples, but they reflect the general AI scene where investment and development continue at a fast pace and high level. As shown by the Blackwell revenue figure and through multibillion-dollar revenue at Alphabet and Amazon's cloud businesses, AI investments are bearing fruit. This and the above two points mean now may not be the time to turn away from AI investing but instead to jump in and buy on the dip.

3 Best Artificial Intelligence (AI) Stocks to Buy in March | The Motley Fool

It's been a tumultuous time for artificial intelligence (AI) stocks recently, with the stock prices of some of the leaders in the field pulling back over the last month or so. However, the recent market volatility has also created potential buying opportunities for long-term investors who know which fallen stock to pick. Let's look at three AI stocks that have that potential and are worth a closer look this month. Despite recently reporting another fabulous quarter of huge revenue growth, Nvidia (NVDA 1.92%) has not been spared from the recent market sell-off. As of this writing, the stock is now down nearly 25% from its all-time high hit in January. Nonetheless, it remains the company best positioned to benefit from the current race to build out AI infrastructure, where spending is on the rise this year. Cloud computing companies are leading the way, with Amazon (AMZN -0.72%) targeting around $100 billion in capital expenditures (capex) this year for building out its AI data centers, followed by $80 billion from Microsoft, and $75 billion from Alphabet. These aren't the only companies chasing AI, with Meta Platforms looking at up to $65 billion in capex this year mostly related to AI infrastructure, while a consortium led by OpenAI and SoftBank is set to spend $500 billion over the next few years on AI infrastructure through Project Stargate. Nvidia is the leading designer of graphics processing units (GPUs), which are used to train AI models and run inference. It has been able to take a 90% share in the GPU market with its CUDA software, the first platform created years ago to let developers program these chips for tasks outside their original purpose of speeding up graphics rendering in video games. In the years since, it has built out an extensive collection of AI libraries and microservices that set it apart. And while some companies have turned to custom AI chips, they generally use them in conjunction with the more flexible and readily available GPUs. The recent sell-off in the stock has left it at a very attractive forward price-to-earnings ratio (P/E) of 25.5 times 2025 analysts' estimates and a price/earnings-to-growth (PEG) of under 0.5 -- with PEGs below 1 usually indicating a stock is undervalued. While best known for its e-commerce operations, Amazon is a tech company through and through. The biggest contributor to its profits is its cloud computing unit Amazon Web Services (AWS). The company created the infrastructure-as-a-service model and remains the largest cloud computing company by market share. AWS has also been the company's fastest-growing segment, with revenue climbing 19% to $28.8 billion last quarter, while its operating income surged 47% to $10.6 billion. The segment's solid operating leverage is helped by Amazon having developed its own custom AI chips, called ASICs (application-specific integrated circuits). They are designed for very specific purposes and tend to outperform GPUs in these tasks while using less power. However, they lack the flexibility of GPUs. Amazon reportedly did the heavy lifting in designing these chips, while licensing some technology from Marvell. This helps give the company a cost advantage. Customers are using AWS and its services to help build their own AI models and applications. The company provides them with several leading foundational models from which to start. Customers can use its SageMaker platform to customize and train their AI models and then move them into production. AWS has been capacity-constrained and will pour $100 billion into AI data centers this year to help meet demand. Amazon has a history of spending big to win big, and it is leading the charge in this area. The stock is off about 15% from its recent highs and now trades at an attractive forward P/E of 32 times. Turning to the software side of AI, Salesforce (CRM -1.10%) is a solid option for investors with the stock down 20% from its recent highs. The customer relationship management (CRM) software company is looking to become the leader in agentic AI -- that is, AI agents that can complete tasks assigned to them with little human supervision needed. The company's new agentic AI offering, Agentforce, was launched in October 2024 and has seen a strong initial reception, with Salesforce saying it has 5,000 deals in place, including 3,000 that are already paying. Agentforce offers customers several out-of-the-box AI agents from which to start, or customers can create their own through no-code and low-code tools built into the platform. Earlier this month, Salesforce launched a new Agentforce marketplace called AgentExchange where it has signed up more than 200 initial partners to offer hundreds of ready-to-use solutions and templates to expand potential AgentForce uses. A number of leading software companies have already joined the marketplace, including Workday, Docusign, and Box. Agentforce costs $2 per interaction, so this is an enormous opportunity for the company the more agents it can get into the wild. Ultimately, if it can increase productivity and save customers' money, it should be a big growth driver for Salesforce in the years ahead. The stock is attractively valued at 26 times 2025 analyst earnings estimates and a 0.35 times PEG.

2 Artificial Intelligence (AI) Stocks to Buy in the Tech Sell-Off | The Motley Fool

Artificial intelligence (AI) stocks were the market superstars over the past two years, leading the S&P 500 and the Nasdaq to double-digit gains. And for good reason. The technology could be the next big thing for companies, helping them streamline their operations and pump up earnings. AI has already helped some players do just that, demonstrating that it could become a game-changer for many. But in recent days, these stars haven't been glowing as brightly as before. Concerns about the general economic environment have weighed on them amid new government policies and President Donald Trump's implementation of tariffs on the U.S.'s largest trading partners, Canada, Mexico, and China. These tariffs are a concern because they could lift prices for certain companies that manufacture outside the U.S. and spark rising inflation within the country. This could directly increase these companies' costs, and higher inflation might hurt customers' wallets, resulting in lower revenue. So, the tech-heavy Nasdaq has dropped more than 7% over the past two weeks, led by AI stocks. But it's important to remember that today's headwinds aren't permanent and don't change the long-term growth stories of many of these AI players. That's why now isn't the time to sell but instead to buy. Let's check out two AI stocks to pick up in the tech sell-off. Amazon (AMZN -0.72%) has benefited from AI across its two high-growth businesses: e-commerce and cloud computing. The company uses AI in e-commerce to gain efficiency and please customers and sellers on its platform. For example, AI helps Amazon define the fastest and shortest delivery routes for packages, saving the company time and money. And fast delivery is something customers like, a point that may encourage them to keep ordering from Amazon. Amazon has already scored a major win in AI through its cloud computing business, Amazon Web Services (AWS). As of the fourth quarter of last year, AWS has generated a $115 billion annual revenue run rate. AWS drives Amazon's overall profit, selling customers a wide variety of AI products and services -- from Nvidia's premium chips and lower-cost Amazon-made chips to a fully managed service that allows customers to tailor popular large language models to their needs. And since AWS is the world's biggest cloud provider, it already has an audience right there, ready to sign up for its latest AI offerings. I also like Amazon for its long record of earnings growth, and the company's move in recent years to revamp its cost structure should continue boosting revenue in the coming quarters. Amazon shares have slipped more than 10% over the past month, leaving them trading for about 32 times forward earnings estimates, down from more than 45 times late last year. Considering my points above, the stock looks like a bargain buy and hold at today's level. In recent days, Palantir Technologies (PLTR 5.53%) faced an additional headwind to those mentioned above. The company, which sells AI-driven software to government and commercial customers, saw its shares slip after the Pentagon -- a major customer -- proposed cutting spending by 8% every year over the coming five years. But I think the concerns surrounding this news were overdone. It's important to remember that the Trump administration is focusing on gaining efficiency across departments, and Palantir's AI software helps customers do exactly that. The software aggregates a customer's data and makes better use of it. For example, it streamlines operations and reduces costs. So, the government's focus on efficiency could potentially lead to more contracts for Palantir. Meanwhile, Palantir's commercial business has taken off in recent quarters, delivering double-digit revenue growth and increasing contract value. In the latest period, Palantir closed more than $800 million in U.S. commercial contract value -- a record level -- for a 134% increase year over year. So, the commercial customer could represent a major growth driver for the company in the years to come. Thanks to the commercial customer trends and ongoing double-digit growth in the government business, Palantir's earnings have soared, the company was invited to join the S&P 500 last year, and the stock has advanced more than 700% over the past three years. But that also resulted in a sky-high valuation. The good news is that the stock's 27% decline over two weeks has brought its valuation down. Today, the forward price/earnings-to-growth ratio (PEG ratio) has fallen below 1, suggesting the stock is no longer overvalued. So, now is a fantastic moment for growth investors looking for a top AI player to scoop up some shares.

2 AI Chip Stocks to Buy on the Dip | The Motley Fool

After a great run over the past couple of years, top artificial intelligence (AI) stocks have stumbled out of the gate so far in 2025. High valuations, concerns about the economy (and demand for semiconductors), and the near-term direction of spending on data centers are contributing to negative sentiment for these stocks right now. While the semiconductor industry is cyclical, it has grown for decades, and AI is the catalyst that should lift leading chip stocks higher over the next decade. Dell'Oro Group believes spending on data center infrastructure could surpass $1 trillion in five years. The following stocks are well-positioned to profit from this opportunity. Shares of Nvidia (NVDA 1.92%) are down 23% from their recent highs. While the near-term impact of President Donald Trump's tariff policies is still unknown for Nvidia and the broader semiconductor industry, Nvidia's lead in graphics processing units (GPUs) provides ample opportunities for long-term growth and shareholder returns. Nvidia said during its fourth-quarter earnings call in February that demand for its chips needed for AI inferencing is accelerating. Inferencing is where most of the value for chip companies will come over the long term. This is the stage of AI development in which models become smart enough to make predictions on their own from new data, and it requires significantly more computing power. Nvidia says AI models that can reason at a very high level will require 100 times more compute per task. This is why companies are investing in its new Blackwell computing platform, which provides up to 25 times more throughput for data units, or tokens, while lowering costs compared to older hardware. Revenue from Blackwell hit $11 billion in the fourth quarter and should increase as production ramps this year. Large cloud service providers, including Amazon, Microsoft, and Alphabet's Google, totaled nearly half of Nvidia's $35 billion in data center revenue last quarter. But there are plenty more tech companies scrambling to get their hands on the company's powerful GPUs. xAI is adopting Nvidia's GB200 chip to power its Grok AI models. Meta Platforms is using Nvidia's Grace Hopper super chip for running ads on Instagram and Facebook. Meta said it plans to spend between $60 billion to $65 billion in capital expenditures this year to support plans in generative AI and other business operations, and that's to Nvidia's benefit. Overall, Nvidia's total revenue grew 12% over the previous quarter and 78% year over year to reach $39.3 billion in Q4. Blackwell will be a key driver in pushing Nvidia's revenue up to approximately $43 billion in Q1, based on company guidance. The recent dip has brought the stock's valuation to 24 times this year's consensus earnings estimate. That's below the S&P 500's trailing price-to-earnings (P/E) of 29, which seems like a steal considering Nvidia's $1 trillion opportunity in the data center market. Marvell Technology (MRVL -1.99%) makes various chip products that help companies move data faster and more efficiently. It sells semiconductor products in the data center and wireless communications markets. The stock has been climbing over the past year on growing demand for its custom AI chips and digital signal processors used in server racks and AI workloads. The stock is down 33% year to date after the company posted its fourth-quarter financial results. Revenue beat expectations, but investors were looking for higher revenue guidance for the first quarter. The company is still positioned for continued growth in its data center business, which makes the dip an excellent buying opportunity. From a long-term perspective, Marvell is in a strong position. The company is ramping production of its custom AI silicon programs, such as accelerated processing units (XPUs) and an Arm-based central processing unit (CPU), which could drive strong demand over the next few years. Marvell is also developing more advanced ways to transfer data using optics instead of traditional cable wiring, which should open up more opportunities to grow its data center revenue over the long term. It's this type of innovation that drove revenue up 27% year over year in Q4, led by a 78% increase in the data center business. Meanwhile, Marvell's other markets are mixed. Consumer end markets are experiencing revenue declines, while chips sold into the enterprise networking and carrier infrastructure markets are continuing to recover. Overall, the stock's sell-off appears to be more valuation-driven than anything else. Heading into the year, Marvell shares fetched a sky-high 80 times earnings multiple based on this year's consensus estimate. But after the dip, investors can buy shares at a more reasonable forward P/E of 26.

Got $3,000? 3 Artificial Intelligence (AI) Stocks to Buy and Hold for the Long Term | The Motley Fool

It has been less than three years since OpenAI first released ChatGPT to the public, but many of us are using generative artificial intelligence tools on a near-daily basis at work and in our personal lives. Still, adoption of the technology has a long way to go: A recent survey by the U.S. Census Bureau found that less than 7% of businesses use AI regularly. In other words, there's still plenty of room for AI to expand to more businesses, which could spur long-term growth in this massive trend that PricewaterhouseCoopers expects to contribute $15.7 trillion annually to the world economy by 2030. If you have $3,000 to invest, here are three great AI stocks to consider buying. Semiconductor giant Nvidia (NVDA 1.07%) has had such an impressive run recently -- it's up 386% over the past three years -- that many investors wonder if it has anything left in the tank. Considering we're still at the very beginning of the artificial intelligence transition, I'd argue that Nvidia should continue to benefit and grow. The company's AI accelerators have an estimated 70% to 95% share of the artificial intelligence chip market, and large tech companies could spend an estimated $2 trillion over the next few years building AI data centers. Nvidia has been benefiting from this demand, and its sales just keep expanding. In its fiscal fourth quarter (which ended Jan. 26), its data center revenue surged 95% year over year to $35.6 billion. No one knows when this data center spending surge will end, but it's crystal clear that it hasn't slowed yet. Meta Platforms, Microsoft (MSFT 0.15%), Apple, Alphabet, OpenAI, Oracle, and other tech leaders have collectively announced plans for hundreds of billions of dollars in AI data center investments. In its efforts to supply the best GPUs to meet that demand, Nvidia recently released its new Blackwell AI processors. On the fourth-quarter earnings call, management said Blackwell sales have already "exceeded our expectations" and accounted for $11 billion in sales in the quarter -- "the fastest product ramp" in Nvidia's history. After an extended price surge, Nvidia's stock has slumped recently along with other high-growth names, opening up a buying opportunity for investors at a forward price-to-earnings ratio of just 26. Microsoft was a first-mover in generative AI with its early investment in ChatGPT creator OpenAI, and the tech giant continues to make big strides in the space. It has invested $13 billion in OpenAI and has integrated ChatGPT into many of its services and software titles, including its Microsoft 365 productivity suite and the Bing web browser. But it's Microsoft's cloud computing business that may be the biggest winner from the growing use of AI over the long term. The company offers AI services via the Azure cloud computing platform and demand for artificial intelligence cloud products is expanding. Goldman Sachs estimates that global cloud computing revenue could reach $2 trillion by 2030 thanks to AI. Microsoft is investing in this success and recently announced plans for an $80 billion expansion of its AI data center operation to stay ahead of the curve. Microsoft's advantage in this competition is that it's already the world's second-largest cloud computing infrastructure company, with 21% of the market -- and it's gaining on Amazon, which has 30%. With such a strong cloud position already in place, Microsoft is well-positioned to benefit as AI cloud revenues expand. Microsoft's stock trades at a forward P/E of 25.6, which is more expensive than the S&P 500's average multiple of 20. But with the company's access to OpenAI's tech and its strong position in AI cloud computing, it has more room to grow. The final AI stock you should consider adding to your portfolio is chipmaker Taiwan Semiconductor Manufacturing Company (TSM 0.20%), also known as TSMC. This formerly obscure company has gained widespread attention from investors because it's the third-party foundry that manufactures more than 90% of the world's most advanced processors. Its massive advantages over other chip manufacturers have propelled its finances higher. In the fourth quarter alone, its revenue rose 37% year over year to $26.8 billion, and earnings popped by 57% to $2.24 per ADR. And as spending on data centers continues to grow, TSMC's management expects demand for high-end chips to stay strong. "Even after more than tripling in 2024, we forecast our revenue from AI accelerators to double in 2025 as the strong surge in AI-related demand continues," CEO C.C. Wei said on the Q4 earnings call. TSMC recently announced it would invest an additional $100 billion in advanced manufacturing facilities in the U.S. over the next four years -- expanding on the $65 billion investment plan it announced several years ago. Management says this should help TSMC deliver chips to U.S.-based customers such as Apple, Broadcom, Nvidia, and others. TSMC's shares are reasonably priced even after their 70% surge over the past three years. The stock trades at a forward P/E multiple of just 20, on par with the S&P 500. That means investors can scoop up one of the best AI stocks on the market at a fantastic price right now.