In case you missed it, tech stocks are rallying again.
After hitting an all-time high in December, the Nasdaq Composite index fell in January as DeepSeek upended the artificial intelligence (AI) universe with breakthroughs in training and inference efficiency. By late February, many feared that some of the biggest names in tech could be hit hard by President Donald Trump's tariffs. The sell-off accelerated in April after the global tariffs Trump announced turned out to be even worse than investors had feared.
In the weeks since, the Nasdaq has recovered about half of its losses from peak to trough. As of this writing, the tech-heavy index sits just a bit more than 12% below its December high. But there are still plenty of great opportunities in the market. Here are three AI stocks that are still too cheap to ignore.
Image source: Getty Images.
1. Amazon
Amazon(NASDAQ: AMZN) operates the leading cloud computing platform in the world. Its Amazon Web Services (AWS) segment generated $29.3 billion last quarter, up 17% year over year. While that growth rate was slower than its chief competitors, it's worth pointing out a couple of things. First, AWS is significantly bigger than those competitors; second, it remains capacity constrained.
Management expects to bring more AWS capacity online in the second half of the year. The company is planning for over $100 billion in capital expenditures in 2025, and most of that sum will go toward increasing AWS' capacity. It's also investing heavily in its own custom silicon solutions for AI -- the Trainium and Inferentia machine learning chips. CEO Andy Jassy said Amazon is seeing strong adoption of its Trainium instances.
But not all of that spending is going toward bolstering its data centers to support increased use of AI. Amazon also continues to spend on improving its logistics network. After rapidly expanding its footprint in 2020 and 2021, Amazon has spent the last few years overhauling its logistics system to drive higher efficiency in the network. The results have been fantastic: Shipping expenses grew just 3% year over year last quarter, while paid units grew 8%.
Amazon remains well positioned for the long term. Its crown as the e-commerce champion isn't going anywhere. While tariffs might impact its retail operations, it won't be the only retailer impacted. The strong margin expansion it accomplished over the last two years has put it in a better position to absorb higher costs and reduced demand. Meanwhile, it remains an indispensable platform for developers and a leading resource for AI tools and services through AWS.
Investors can currently buy the stock for a relatively low valuation. Its enterprise value is less than 3 times 2025 sales estimates. That's about 10% below its long-term average.
2. Lam Research
Lam Research(NASDAQ: LRCX) is one of the top manufacturers of semiconductor fabrication equipment -- and all of the high-end AI chips going into data centers pass through its machines at various stages of their construction.
Lam has a particular edge in equipment for memory chips. In the first quarter, 43% of its revenue came from memory chip manufacturers, and that share has climbed significantly over the last couple of years due to advancements in AI chips. To get peak performance out of cutting-edge graphics processing units (GPUs), they must be deployed in systems that also feature high-bandwidth memory chips. Memory is frequently the bottleneck in training large language models (LLMs), and as those models have gotten bigger, demand for memory chips has grown significantly.
But Lam is also benefiting from high demand for its equipment for general silicon chip production. As foundries invest heavily in expanding their capacity to meet rising demand from chip designers, Lam is selling more equipment and inking more contracts to service that equipment. Last quarter, its revenue grew by 24%, and management expects growth to accelerate in Q2 despite the uncertainty caused by tariffs. It also expects its operating margins to expand as it leverages its fixed costs.
Over the long run, Lam benefits from a virtuous cycle. As a leading equipment provider to chip manufacturers, it generates more revenue that it can invest into research and development. That allows it to extend its technological lead and win more contracts. As a result, management expects to increase its market share in the wafer fabrication equipment space over time, outpacing the growth of the semiconductor industry.
Lam shares have dropped considerably from the highs reached back in 2024. The stock now trades for just 19 times forward earnings estimates. With management expecting double-digit percentage earnings growth over the next four years, investors should be happy to pay that price for the stock.
3. Meta Platforms
Meta Platforms(NASDAQ: META) is the company behind Facebook and Instagram, and it's making some of the tech sectors' biggest bets on artificial intelligence. At the time of its first-quarter earnings report, management announced it had increased its plans for capital spending this year to between $64 billion and $72 billion, up from previous plans for capex of between $60 billion and $65 billion. While other companies are spending more, they're also renting out some of their computing infrastructure.
The investments appear to be worth it, though. Meta is seeing strong engagement growth, which leads to more ad impressions on its platforms. On top of that, its average ad prices continue to climb, propelling revenue higher by 16% last quarter. That result stands out among other social media advertising companies, which have struggled to replicate Meta's success recently.
But AI offers even more opportunities for Meta. AI-powered marketing tools can help advertisers design and test new campaigns. CEO Mark Zuckerberg eventually sees Meta's AI acting as an agent for businesses, taking a client's objective and budget, and then creating the entire campaign for them. AI agents could also serve key roles in customer service and sales via Meta's messaging apps, WhatsApp and Messenger. That could ultimately become a significant source of revenue, considering those apps' massive user bases.
Meta has also proven to be a cash-generating machine. Even while sinking billions into AI and metaverse development, the company has produced $10 billion or more in free cash flow for eight straight quarters. That provides it with a huge advantage in terms of its ability to keep investing in the development of technologies that can provide it with additional growth opportunities.
Though its share price has been recovering from its 2025 slide -- a rebound that continued after its Q1 earnings release -- Meta stock still trades for just 23 times forward earnings estimates. Given its potential to book double-digit percentage earnings growth and its huge competitive advantages in its industry, Meta's stock is too cheap to ignore at this price.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Levy has positions in Amazon and Meta Platforms. The Motley Fool has positions in and recommends Amazon, Lam Research, and Meta Platforms. The Motley Fool has a disclosure policy.
