2 Buy-the-Dip AI Stocks That Are a Better Deal Than Nvidia

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It's pretty unnerving to buy the dip as we enter a historically bad month for the stock market. The first week of September was led lower by weak labor market data ( hiring is slowing faster than expected ) and considerable weakness in the tech sector. Undoubtedly, a tough (but still decent) showing by Nvidia ( NASDAQ:NVDA ) in the following week was followed up with an unpleasant surprise (revenue target fell short) from Broadcom ( NASDAQ:AVGO ), which tanked more than 10% after its number.

The economic data north of the border hasn't been all too great, either, with Canada's unemployment rate hitting a seven-year high for August. Undoubtedly, recession fears seem to have returned. And if calls grow louder for a double dose (50 bps instead of 25 bps) of rate cuts from the Fed, we could be in for a roller-coaster ride for the next several months.

Either way, bargain-hunters and dip-buyers will finally have more chance to pounce as valuations come in. At this juncture, concentrated weakness in the tech sector seems most appealing, given the AI boom likely isn't going anywhere, even if the economy slips a bit from here. Of course, only time will tell how AI frontrunners react as rates and economic data points take a slide from here.

Here are three AI stocks that look worth pursuing on the way down. Each name is markedly cheaper and likely less vulnerable than Nvidia right now as the great AI-driven bull market in tech takes a breather.

• Last week's tech wreck has unfairly dragged down many high-tech growth companies.
• Broadcom and Alphabet are among the best bargains right here.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report . It features a software stock we’re confident has 10X potential.

Broadcom

Broadcom's stock chart is not pretty after its 10% post-earnings plunge. The stock is now down over 25% from its June peak but still up 171% in the past two years. Indeed, the latest fall into bear market territory looks like a tiny blip on the two-year chart. Undoubtedly, investors were expecting a big beat and raise from Broadcom as it looked to ease jitters following Nvidia's numbers delivered a week prior. They didn't get it, and AVGO stock ate one on the chin.

Though Broadcom's bottom line was strong and better than estimates, the revenue guide for the coming quarter was mild. The company expects revenue from the October quarter to come in at $14 billion , a hair shy of analyst expectations. Anything shy of a massive raising of the bar seems worthy of a sell-off these days, at least as far as AI stocks are concerned.

Goldman Sachs ( NYSE:GS ) analyst Toshiya Hari did not sound rattled by Broadcom's weak sales guide. Hari even called the quarter a "hiccup" that could result in a "reacceleration in the AI semiconductor business" and the "non-AI revenue stream."

Indeed, sellers of AVGO stock may kick themselves if the latest Broadcom results are nothing more than a mild outlier than the start of a new trend. I think the bullish analysts will be proven spot-on with Broadcom. It's still one of the best-positioned long-term AI winners, making it worth pursuing on weakness.

Alphabet

Alphabet ( NASDAQ:GOOG ) has performed far less magnificently than its Mag Seven peers of late, recently slipping below its August lows last week. With GOOG stock sinking more than 4% last Friday, the setup does not look good for the AI firm that had been recently bombarded with regulatory issues.

Mad Money host Jim Cramer even sounded tempted to "get out" of Alphabet shares after falling through its floor of support. Still, Cramer is hanging on for dear life because of a potential pop that could coincide with a potential Apple ( NASDAQ:AAPL ) partnership on AI. Indeed, we've heard chatter about Apple potentially including Google Gemini as a part of its Apple Intelligence platform.

Though I have no idea if Gemini will make its way to iPhones, I do think Cramer brings up a very strong point. Google has a powerful large language model (LLM) and one that could find a home alongside OpenAI's ChatGPT on Apple devices in the future.

Perhaps the biggest reason to hang onto GOOG stock or buy more shares on the way down is valuation. You're getting an AI superstar for 18.12 times trailing price-to-earnings (P/E), which, I believe, makes absolutely no sense. Alphabet shares aren't just cheaper than Nvidia; they're cheaper than most other AI stocks. Heck, they're even cheaper than low-tech companies that aren't growing.

From Gemini's smarts to Waymo's potential in robotaxis and Google Pixel's potential to shine in the AI phone age, there are just too many growth drivers to throw in the towel at these depths. Gemini and Waymo may have their early shortcomings, but it's pretty jarring to think this is the worst (and least capable) they'll ever be.

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