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The Best AI Stocks to Buy Now (Chart)

ForexDepo Team
The Best AI Stocks to Buy Now (Chart)

Why Should You Consider Buying AI Stocks?

AI stocks will disrupt every sector of life, and the cycle remains in its infancy. Therefore, a gigantic growth cycle awaits AI stocks. There are many ways investors can attempt to ride the AI wave higher. AI stocks also represent innovation, improving efficiencies, enabling companies to lower costs, and investor enthusiasm.

Here are a few ways to invest in AI stocks:

  • Invest is AI stocks that build the semiconductors and GPUs necessary to run AI-based solutions.
  • Invest in AI stocks that train AI models.
  • Invest in AI stocks that build data centers.
  • Invest in AI stocks that develop AI tools.
  • Invest in AI stocks that manufacture the hardware for AI solutions to function.

What Are the Downsides to AI Stocks?

While AI stocks benefit from bullish catalysts, investors should consider short-term downside risks before adding AI stocks to their portfolios.

Here are two core downside risks to AI stocks:

  • Most AI stocks are excessively overvalued and expensive.
  • The good news is mostly priced into the current share price.

Here is a shortlist of meme stocks that have made waves or are currently trending:

  • NVIDIA (RIVN)
  • Advanced Micro Devices (AMD)
  • Dell Technologies (DELL)
  • Taiwan Semiconductor Manufacturing (TSM)
  • Digital Realty (DLR)
  • Microsoft (MSFT)
  • Meta Platforms (META)
  • Amazon (AMZN)
  • Alphabet (GOOG)
  • Baidu (BIDU)
  • Alibaba (BABA)
  • ASML (ASML)
  • Innodata (INOD)
  • Quantum Computing (QUBT)
  • TSS (TSSI)

ASML Fundamental Analysis

ASML (ASML) has a monopoly on extreme ultraviolet lithography (EUVL) photolithography machines. They are necessary to manufacture the world’s most advanced chips. It is also a NASDAQ 100 and Euro STOXX 50 constituent.

So, why am I bullish on ASML after its recent correction?

ASML is a core player in the AI race, as it is the sole manufacturer of EUVLs. Therefore, the success of most Western AI stocks leads back to a machine manufactured by ASML.

ASML Fundamental Analysis

The price-to-earnings (P/E) ratio of 11.73 makes ASML an inexpensive stock. By comparison, the P/E ratio for the NASDAQ 100 is 41.42.

The average analyst price target for ASML is 850.67. It suggests excellent upside potential from current levels.

ASML Technical Analysis

ASML Price Chart

ASML Price Chart

  • The ASML D1 chart shows price action between its ascending 50.0% and 61.8% Fibonacci Retracement Fan.
  • It also shows ASML trading inside of a horizontal resistance zone.
  • The Bull Bear Power Indicator turned bearish but stabilized at its ascending support level.

My Call

I am taking a long position in ASML between 701.19 and 730.60. The valuation of ASML ranks among the cheaper ones in the AI sector, and there will be no AI without the machines ASML sells.

Baidu Fundamental Analysis

Baidu (BIDU) is a Chinese multi-national technology conglomerate with an expanding AI footprint and a leadership in internet search.

So, why am I bullish on BIDU after its most recent advance?

BIDU considers going open source in its AI business, which could catapult this undervalued company ahead of many competitors. It is also well-diversified with a steady income stream from search that allows it to finance its ambitious AI plans.

Baidu Fundamental Analysis Snapshot

The price-to-earning (P/E) ratio of 8.95 makes BIDU an inexpensive stock. By comparison, the P/E ratio for the NASDAQ 100 is 41.42.

The average analyst price target for BIDU is 101.07. It suggests more upside potential for this sleeping dragon.

Baidu Technical Analysis

Baidu Price Chart

  • The BIDU D1 chart shows price action supported by its ascending Fibonacci Retracement Fan.
  • It also shows BIDU trending higher inside a bullish price channel.
  • The Bull Bear Power Indicator is bullish, and the trendline has moved higher since April.

My Call

I am taking a long position in BIDU between 85.17 and 94.50. BIDU benefits from low valuations, a healthy balance sheet, and a well-diversified business model with search and AI at its core.

Taiwan Semiconductor Manufacturing Fundamental Analysis

Taiwan Semiconductor Manufacturing (TSM) is a Taiwanese semiconductor contract manufacturing and design company. It is also the world’s largest dedicated independent semiconductor foundry.

So, why am I bullish on TSM despite its almost 100% rally from the April lows?

TSM is a leading semiconductor company for the most advanced chips. It counts AMD, NVIDIA, Qualcomm, HiSilicon, Spectra7, ARM, and Apple among its customers. I expect its dominance in contract manufacturing to continue amid the ongoing AI cycle.

Taiwan Semiconductor Manufacturing Fundamental Analysis Snapshot

The price-to-earning (P/E) ratio of 28.80 makes TSM an inexpensive stock. By comparison, the P/E ratio for the NASDAQ 100 is 41.42.

The average analyst price target for TSM is 269.76. It suggests moderate upside potential, but investors should not ignore potential increases to the price target.

Taiwan Semiconductor Manufacturing Technical Analysis

Taiwan Semiconductor Price Chart

  • The TSM D1 chart shows price action hugging its 0.00% ascending Fibonacci Retracement Fan.
  • It also shows TSM trending higher inside a bullish price channel.
  • The Bull Bear Power Indicator is bullish, and except for one session, has remained in bullish territory since the end of April.

My Call

I am taking a long position in TSM between 231.76 and 248.28. TSM assists several leading AI stocks, and it should continue its upward momentum. I will buy the dip in this semiconductor foundry.

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