In This Article:
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Amazon's cloud computing platform is seeing a huge boost from its AI business.
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Taiwan Semiconductor forecasts phenomenal growth over the next five years.
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Alphabet's stock has been beaten down despite solid results.
Although the market has recovered from its April lows over the past few months, a handful of dominant artificial intelligence (AI) stocks are still well off their all-time highs. The future is still bright for many of these companies, and I think now is an excellent time to scoop up some of these stocks while they're still down.
Three stocks that are still down at least 10% from their all-time highs that look like strong picks right now are Amazon (NASDAQ: AMZN), Taiwan Semiconductor Manufacturing (NYSE: TSM), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). I think buying shares of this trio could be a winning move for investors, and now is an excellent time to initiate a position.
When investors hear Amazon, they don't automatically think about AI, but they should. Amazon has deployed AI throughout its business, but that's not the reason I consider Amazon an AI stock. Amazon gets a large chunk of its profits (63% in the first quarter) from Amazon Web Services (AWS), its cloud computing business.
AWS is a massive beneficiary of the AI movement, as its servers are excellent places to run AI workloads on, especially when the client lacks the resources or workloads to justify buying their own supercomputer. That encompasses nearly all companies, except for the AI hyperscalers, and there are still a lot of AI applications to be deployed at an average business. This bodes well for Amazon, as AWS is the most critical part of its company, given how much it contributes to its profitability.
Amazon saw net sales in its AWS segment in the first quarter grow 17% from a year ago, with operating income increasing even faster at a 23% pace. It's critical for Amazon to accelerate this business unit. If it can achieve that, it will have an outsized effect on Amazon's overall profit picture. The current environment is favorable for AWS, so investors shouldn't be surprised if Amazon's stock continues to rebound as long as AWS posts solid results.
With Amazon stock down around 14% from its all-time high, it still looks like a great value.
Few companies are as critical to modern technology as Taiwan Semiconductor Manufacturing (TSMC). Taiwan Semi is a chip foundry and fabrication facility for a wide client base. If you have a high-technology device (like a laptop or cellphone), chances are it has a chip from Taiwan Semiconductor. As a supplier to nearly everyone in the chip industry, TSMC has valuable insights into where the industry is headed.