The stock market has staged an impressive rebound following a turbulent last few months. The S&P 500 index, which had neared bear market territory when it was down 19% from its highs in April, has quickly recouped most of those losses and is now up 1% year to date as of this writing.
News of efforts by the Trump administration to negotiate bilateral trade deals has eased some fears that the worst-case scenario around various trade wars and economic disruptions may not come to pass. Robust corporate earnings by several companies have further bolstered investor optimism, particularly around the transformative potential of artificial intelligence (AI) as a key driver of economic growth.
Here are three AI stocks that could be a great buy for your portfolio this month.
Image source: Getty Images.
1. Apple: A China trade truce winner
The U.S. and China are suspending retaliatory tariffs for 90 days (while keeping some tariffs) as they pursue a more comprehensive trade deal, and that has lessened the uncertainty around Apple(NASDAQ: AAPL).
The company relies heavily on China as a key market, accounting for nearly 17% of its global sales, and as a pivotal part of its supply chain, where over 80% of iPhones are manufactured. The pause on retaliatory tariffs, coupled with exemptions for electronics, allows Apple to focus on accelerating its AI-driven transformation.
The company is leveraging proprietary machine-learning models into a suite of new AI tools and capabilities through its Apple Intelligence initiative across its ecosystem. In its fiscal second-quarter report (for the period ended March 29), revenue climbed 5% year over year, with continued momentum in high-margin services driving an 8% increase in earnings per share (EPS) to $1.65.
These trends are expected to continue. Anticipation is building for the next-generation iOS 19 and iPhone 17, which are likely to be released after this year. The devices will integrate more AI-optimized features that could boost sales as users upgrade.
With shares of Apple still trading down about 18.5% from their 52-week high, the stock appears to be a compelling buy-the-dip opportunity for investors seeking exposure to the AI revolution.
2. AppLovin: A leader in AI-powered adtech
Share prices of AppLovin(NASDAQ: APP) have soared by 339% over the past year, amid accelerating growth and earnings. The advertising technology (adtech) innovator is capitalizing on the strong demand for its suite of mobile advertising solutions, now powered by artificial intelligence. Its Axon AI engine uses machine learning and advanced algorithms to boost ad engagement and conversions.
In the first quarter (for the period ended March 31), advertising revenue surged by 71% year over year, with management crediting its AI enhancements. Even more impressive was the 149% increase in EPS to $1.67.
AppLovin is expanding into the e-commerce sector, leveraging its Axon platform for hyper-targeted advertising for online retailers, which will use real-time data analytics and generative AI as a new growth driver. The company also intends to enter the video streaming market, a diversification beyond mobile gaming ads.
The stock trades at a forward price-to-earnings ratio (P/E) of 33, a reasonable level given the company's trajectory. These tailwinds, backed by overall solid fundamentals, should keep shares of AppLovin climbing higher.
3. Super Micro Computer: AI infrastructure tailwinds
Super Micro Computer(NASDAQ: SMCI) is a pivotal player in AI infrastructure, supplying rack-scale server systems that integrate power, storage, cooling, and software to support graphics processing unit AI chips from Nvidia.
Despite significant growth in recent years, Supermicro (as it is also known) faced several challenges in 2024, including a probe by the U.S. Department of Justice related to accounting concerns. This was reflected in the stock sell-off, with shares currently down about 62% from their all-time high. However, an independent special committee found no evidence of fraud or misconduct, and the company has since filed its audited 2024 annual report. By this measure, Supermicro is emerging as a comeback story.
The company excels in direct liquid cooling technology, which enhances energy efficiency for data-intensive AI workloads. Supermicro projects that over 30% of new data centers globally will adopt liquid-cooled infrastructure in 2025, signaling a major growth opportunity.
With Wall Street estimates for 2025 annual revenue growth of 48% and the stock trading at a forward P/E of just 22, Supermicro offers a compelling mix of high growth and value, making it well-positioned to reward shareholders over the long run.
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Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AppLovin, Apple, and Nvidia. The Motley Fool has a disclosure policy.
