AI Stocks: Take the biggest opportunity amid the market selloff

Editor’s note: Eric Fry, here. Today, my InvestorPlace colleague Luke Lango will discuss why the AI ​​boom seems to be firing on all cylinders right now—even in the middle of a major market sale. He will also share his current strategy.

Take it, Luke…

Hello, reader.

You know what they say; the numbers don’t lie. But of course people do.

That’s why when it comes to scholarship, I ignore experts and talking heads. I block what people say on social media. Instead, we let the numbers speak for themselves. And right now, the numbers scream that investors should buy the dip in AI stock.

AI shares have been the hottest trade on Wall Street since the launch of ChatGPT in late 2022. However, in recent weeks they have suffered their worst fall since the AI ​​market began, prompting some to ask if the AI ​​bubble has popped. .

But we think the data shows it didn’t.

To see why, take a look at the volume of AI companies’ corporate earnings over the past week…

AI Stocks: Q2 gains imply the industry should remain hot

In our view, the recent second quarter earnings clearly suggest that the AI ​​boom – from infrastructure to applications – is stronger than ever right now.

AI infrastructure build remains robust and shows no signs of slowing down, highlighted by AI server provider Super Micro Computer (SMCI) and provider of network solutions for data centers Lumen Technologies Inc. (LIGHT). The former anticipates ~90% revenue growth next year (vs. ~60% expected). And the latter is reporting record demand for its products, thanks to relentless spending on AI infrastructure.

Meanwhile, the wave of AI hardware upgrades is coming, and operators expect it to be huge. Supplier of smartphone components Cirrus Logic Inc. (Cruse) provided next quarter guidance on huge expectations for an AI smartphone refresh cycle.

And on the software side, it looks like companies are finally creating transformational AI applications. For example, provider of technology solutions for law enforcement Axon Enterprise Inc. (AXON) said its newest AI product – Draft One – is seeing record demand, building an order pipeline of more than $100 million in just three months. AI lending company upstart Holdings Inc. (UPST) said that massive improvements to its AI modeling are improving transaction flow and driving large margin expansion. Not to mention, Dynatrace Inc. (DT), The black line Inc. (BL), Wix.com Ltd (WIX), AppLovin Body. (app) and Fortinet Inc. (FTNT) all also highlighted new AI software products that are driving growth.

The Final Word

From infrastructure to hardware to software, the AI ​​Boom seems to be firing on all cylinders right now.

In addition, companies are also figuring out how to use AI to supercharge profits. For example, both Upstart and Shopify Inc. (STORE) talked about how they are using artificial intelligence and automation to reduce costs, improve margins and drive profit growth.

Folks – these are some really good reads on the topic of AI investing.

It’s real. It has a lot of momentum. And it’s not slowing down anytime soon.

That’s why we think investors should view short-term weakness in AI stock as nothing more than an opportunity to buy long-term winners.

This is our recommended strategy in the context of current stock market volatility. Buy this chop with high quality AI stocks.

Of course, AI hardware stocks like Camtek Ltd (AMOUNT), Micron Technology (MU), della Technologies Inc. (della), Applied Materials (lover), Qualcomm Inc. (QCOM) and others look attractive in this sale. So are software stocks like Axon, ServiceNow Inc. (NOW), intuit (intuit), Adobe Systems (ADBE) and Atlassian Corp. (TEAM)…

But these aren’t our favorite AI stocks to buy in this dip.

Learn about a few other top stocks we’re watching right now.

Sincerely,

Luke Lango,

Editor, Investing in hypergrowth