Nasdaq Correction: 3 AI Stocks to Buy if Prices Fall

The Nasdaq Composite (^IXIC -3.43%) has been on a rollercoaster ride in recent months, with the index falling more than 10% below its bull market high in August 2024. This decline has raised concerns about a potential correction in the tech-heavy index. While corrections are a normal part of the market cycle, investors may be wondering if now is the time to buy high-flying AI stocks at discounted prices. In this article, we will explore three AI stocks that have shown resilience during past market downturns and could be attractive investments if the Nasdaq correction continues.

1. Nvidia (NVDA -3.26%)

Nvidia is a leading provider of graphics processing units (GPUs) used in AI applications. The company's GPUs are required to train AI models, and Nvidia has led the GPU market for many years. In the fiscal second quarter of 2024, Nvidia reported a 122% year-over-year increase in revenue, demonstrating the company's strong performance even during market downturns.

Nvidia's forward price-to-earnings (P/E) multiple of 26 is attractive, considering the company's expected earnings growth of 41% next year. The upcoming launch of Nvidia's Blackwell computing platform is expected to generate billions in revenue in the fiscal fourth quarter, further driving growth. Analysts expect Nvidia to grow earnings per share (EPS) at an annualized rate of 36% over the next several years, indicating the company's long-term resilience.



2. Microsoft (MSFT -2.24%)

Microsoft is a top player in AI and has delivered outstanding returns over the last year. The company's partnership with AI researcher OpenAI, the company behind ChatGPT, has led to the Azure OpenAI service being used by 65% of Fortune 500 companies. Microsoft Azure, the company's enterprise-cloud service, grew revenue by 29% year over year in the most recent quarter.

Despite the market downturn, Microsoft's stock has fallen only 14% from its recent high, indicating its resilience. Wells Fargo analyst Michael Turrin believes growing server supply is a catalyst for accelerating revenue growth in the second half of Microsoft's fiscal 2026, which coincides with Nvidia's launch of Blackwell. The long-term growth potential of the AI server market, forecast to increase about tenfold to $430 billion by 2033, supports the demand for Nvidia and Microsoft's products.



3. AMD (AMD -2.84%)

AMD designs high-performance computer processors, including the Ryzen line for desktops and notebooks, the Epyc range of server-grade chips, and the Instinct collection of AI computing accelerators. AMD's AI accelerators go head-to-head with Nvidia's AI accelerator solutions and are often found in AI supercomputers managing the AI accelerator computations with Epyc processors.

AMD's third-quarter sales jumped 18% year over year, driven by a 122% surge in the data center segment. The company's forward price-to-earnings (P/E) multiple of 145 is relatively high, but AMD's expected earnings growth of 41% next year makes it an attractive investment opportunity.

In conclusion, the Nasdaq correction presents an opportunity for investors to buy high-flying AI stocks at discounted prices. Nvidia, Microsoft, and AMD have shown resilience during past market downturns and remain attractive investments due to their strong performance, attractive valuations, and long-term growth potential in the AI market. However, investors should always do their due diligence and consider the specific risks and opportunities associated with each stock before making an investment decision.