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 (SNPINDEX: ^GSPC) is down around 6% (at the time of this writing).
However, I think this is a knee-jerk reaction to something that likely won't last more than a few months. As a result, I'm taking this sell-off as an opportunity to load up on some of my top AI picks. Topping this list of great buys now are Nvidia (NASDAQ: NVDA), Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), and Taiwan Semiconductor Manufacturing (NYSE: TSM). These three are all down around 20% from their all-time highs, and investors should take the opportunity to scoop these winners up while they're cheap.
Let's take a closer look.
1. Nvidia
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.
2. Alphabet
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.
3. Taiwan Semiconductor
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.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keithen Drury has positions in Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
