3 AI stocks are down more than 50% from their 52-week highs. Could there be bargain buys right now?

It’s hard not to get caught up in the artificial intelligence (AI) hype when analysts are projecting so much growth. Grand View Research projects that by 2030, the AI ​​market will be worth $1.8 trillionup from about $279 billion this year. With such growth, investors who don’t own AI stock may feel like they’re missing out.

But buying shares of the chip maker Nvidia or other AI stocks that have already generated massive returns might not be all that appealing given their high valuations. Buying at these high levels could limit the gains you get from a stock in both the short and long term.

Another option is to consider AI stocks that haven’t done so well recently. You may be taking more risks, but you could make some strong gains if they eventually turn around. Snowflake (SNOW -3.29%), Super Micro Computer (SMCI 4.59%)and SoundHound AI (SOUND -0.80%) all AI stocks are down more than 50% from their 52-week highs. Below, we’ve ranked them according to how likely they are to change things.

1. Super Micro Computer

Super Micro Computer, also known as Supermicro, was one of the most popular AI stocks to own earlier this year. But it has been struggling for weeks after the release of fourth-quarter 2024 earnings and a report from the probe into outstanding short seller Hindenburg questioning the company’s accounting practices. While such reports may be biased and contain unproven allegations, investors were nonetheless bullish on the stock following these developments.

Today, Supermicro stock is trading at around $450 per share, more than 60% below its 52-week high of $1,229. The company’s business has been booming as it provides clients with servers and IT infrastructure to help them grow their operations, especially as they expand their AI products and services.

For the fiscal year ended June 30, Supermicro’s sales totaled $14.9 billion, up 110 percent year over year. Also, profits increased from $640 million to $1.2 billion. However, its latest earnings report alarmed investors as its gross margin shrank, which could severely hamper its earnings outlook if that trend continues.

Supermicro makes for an intriguing contrarian buy as Hindenburg’s brief report and latest quarterly results managed to overshadow what is still an incredible growth streak. Indeed, there are risks due to its shrinking margins, but it may be an AI stock worth risking right now.

2. Snowflake

Data storage company Snowflake struggled in 2024 as it posted unimpressive results and investors were bearish since the company’s CEO unexpectedly retired earlier in the year. It also didn’t help that the company was embroiled in a major data breach that affected many large customers. Down more than 40% year to date, Snowflake’s decline has continued since the stock peaked in late 2021.

For Snowflake to turn things around, they need to put up better numbers, especially on the bottom line. While the company has grown its business, this is not so encouraging when losses have also increased. In the first two quarters of this year, Snowflake’s operating loss rose 26% year over year to $703.9 million, nearly matching its 31% increase over the same period. And to make matters worse, management cut its margin guidance for the full fiscal year 2025.

Until Snowflake shows that there is hope for future profitability, I would avoid the stock.

3. SoundHound AI

Shares of SoundHound AI took off earlier in the year as investors learned that Nvidia had invested in the company. While the stock has leveled off in recent months, it’s still up more than 130% year-to-date, even after falling 52% from its high of $10.25.

SoundHound’s voice AI technology can help restaurants take orders and follow voice commands. While the business is growing, competition in this space is intense, and its numbers may not be high enough to suggest that its market share is that high.

In the second quarter, the company’s revenue rose 54% to $13.5 million, but its net loss increased 60% to $37.3 million.

There’s still a bit of uncertainty surrounding SoundHound AI, and it’s arguably the riskiest pick on this list given its soaring valuation. I would avoid it despite the sale.