of S&P500 Stocks have risen in a bull market over the past three years, but the index has been experiencing some turbulence recently. A host of concerns weigh on investors’ minds, from worries about heavy spending on artificial intelligence (AI) to worries about war in Iran.
These headwinds caused many blue-chip stocks to decline. While it may seem daunting to buy during market volatility, tough times actually present opportunities for long-term investors to buy stocks at reasonable or discounted prices. And this is the best news of all. History shows that major indexes and strong stocks have always recovered and moved forward over long periods of time.
With this in mind, here are my top 5 AI stocks to buy during this market pullback.
Image source: Getty Images.
1. Palantir Technologies
Palantir Technologies (PLTR 1.65%) has been around for more than 20 years, but the software company has seen steady revenue growth over the past few years. The company is benefiting from AI demand thanks to the launch of its Artificial Intelligence Platform (AIP), an AI-powered software that helps customers aggregate, analyze, and put their data to practical use.
The results can be game-changing, and the company recognizes this, driving the strength of Palantir’s commercial business. This is significant because it will provide a new growth engine for Palantir, which has previously relied on government contracts.
Palantir will continue to benefit as companies and organizations look to apply AI to their problems. And AIP makes it easy to do that. Palantir stock isn’t cheap, but its valuation has fallen significantly, making it a reasonable buy today.
PLTR PE Ratio (Forward) Data by YCharts
2. Amazon
Amazon (AMZN 0.87%) is winning in the AI space because it is both a user and a seller of AI products and services. The company is applying AI to its e-commerce business to increase efficiency across its fulfillment network and delivery system. Additionally, its cloud computing arm, Amazon Web Services (AWS), provides customers with a wide range of AI tools and platforms.
All of this is driving growth, and this should continue as the AI story unfolds. Meanwhile, Amazon’s e-commerce business and non-AI cloud products are also delivering growth and, importantly, proving their strength in the long term.
Today’s changes
(-0.87%) $-1.83
current price
$207.70
Key data points
Market capitalization
$2.2 trillion
daily range
$206.23 – $210.56
52 week range
$161.38 – $258.60
volume
1.6M
average volume
49M
gross profit
50.29%
Amazon stock currently trades at 27 times forward earnings, up from more than 35 times just a few months ago, making it a smart buy on a downturn.
3.Microsoft
microsoft (MSFT 1.57%) has established itself as a leader in AI through its investment in its AI lab OpenAI and its cloud computing business. Similar to Amazon, the tech giant offers its customers access to a wide range of AI products and services, which is driving significant growth.
In its most recent quarter, Microsoft said its cloud services revenue soared 39%, with demand continuing to outstrip supply. And at this early stage in the AI story, Microsoft is building a significant presence and stands to benefit as the next chapter unfolds.
Today’s changes
(-1.57%) $-6.32
current price
$395.54
Key data points
Market capitalization
$2.9 trillion
daily range
$394.24 – $404.80
52 week range
$344.79 – $555.45
volume
1.4M
average volume
34M
gross profit
68.59%
dividend yield
0.88%
Microsoft has also demonstrated its strength over time, generating growth through things like its software business and gaming. The stock is currently on sale, trading at just 24x forward earnings.
4. Apple
apple (AAPL 2.15%) was not an AI leader because it took time to add AI capabilities to its products. But the smartphone leader may start to benefit from Apple Intelligence, as the AI platform creates another reason for Apple fans to spend more time with their iPhones.
The company is also entering a new era of growth driven by service revenue. Apple now has a large installed base of active devices, which are the door to recurring revenue. This is because users sign up for a variety of services, from storage to digital entertainment. In fact, service revenue has reached records every quarter.
Today’s changes
(-2.15%) $-5.49
current price
$250.27
Key data points
Market capitalization
$3.7 trillion
daily range
$249.87 – $256.32
52 week range
$169.21 – $288.62
volume
1.6M
average volume
48M
gross profit
47.33%
dividend yield
0.42%
Apple stock currently trades at 30 times forward earnings estimates, which is reasonable for a company with a long track record of profit growth and the potential for even more growth in the future.
5. Soundhound AI
Soundhound AI (Thorn 2.28%) I am a voice AI expert. The company’s patent-protected platform converts speech directly into meaning. There is no need to convert audio to text first. Customers from various industries have praised the quality of this system and are rushing to sign contracts with the company.
Today’s changes
(-2.28%) $-0.17
current price
$7.30
Key data points
Market capitalization
$3.1 billion
daily range
$7.15 – $7.81
52 week range
$6.52 – $22.17
volume
30M
average volume
26M
gross profit
32.96%
SoundHound’s revenue increased nearly 100% last year, driven by customer deals across automotive, restaurant, retail, financial and other industries. And in its latest quarter, the company closed a record number of deals.
Cautious investors may want to keep this audio specialist on their watchlist as it hasn’t yet turned a profit, but if you’re an aggressive investor, now is the perfect time to get into this AI winner during a downturn.
