Artificial intelligence (AI) is by no means a new technology. The term was first coined by mathematician and computer scientist Alan Turing in 1950. Since then, the generative technology has appeared in one form or another for decades. However, advances in tech have only recently made it possible for companies to bring the true concept of AI into reality.
The launch of OpenAI's ChatGPT in November 2022 breathed new life into the industry, forcing many to rethink what they thought was currently possible with AI. As a result, interest has skyrocketed as companies across tech have rushed to get in on the ground floor. The Nasdaq Composite index has climbed 68% since the start of 2023, driven primarily by excitement over AI.
However, macroeconomic concerns have led to a drop in the market over the last month, bringing the same index down by about 4%. Yet, recent declines are likely temporary, with many tech giants continuing to enjoy solid financial gains from their respective AI offerings. As a result, now could be an excellent time to invest in the market before it's too late.
So, here are two AI stocks to buy after a tech market sell-off.
1. Advanced Micro Devices
Advanced Micro Devices (NASDAQ: AMD) stock has fallen about 1% since the start of 2024, brought down by a challenging start to the year as it has faced steep competition from Nvidia and a general pullback from tech investors. However, recent declines have increased the value of its stock, making it a no-brainer investment for those in it for the long haul.
Data by YCharts.
This chart shows AMD's forward price-to-earnings ratio (P/E) and price-to-sales ratio are below their 12-month averages. The figures indicate AMD is trading at one of its best values in months, making now an excellent time to invest in its AI potential.
Since the start of last year, AMD has unveiled a range of new AI products as it worked to catch up to market leader Nvidia. On June 3, CEO Lisa Su said about the company's ambitions, "AI is our number one priority, and we're at the beginning of an incredibly exciting time."
During the same keynote at the Computex conference in Taipei, the company debuted its Ryzen AI 300 series of central processing units (CPUs) for laptops and its Ryzen 9000 CPUs for desktops. AMD also revealed its data-center chip roadmap, announcing its Instinct MI325X AI accelerators, set to release in the first quarter of 2024, the MI350 series for 2025, and the MI400 for 2026.
Meanwhile, AMD is already making promising headway in AI, illustrated by a 115% jump in revenue in its data-center segment in Q2 2024. The company has attracted prominent names to its list of AI chip customers, including Amazon , Microsoft , and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) , which strengthen its position in the sector.
AMD is on an exciting growth path, making its stock a no-brainer after a sell-off.
2. Alphabet
Alphabet's stock is up 23% year over year yet has tumbled 13% over the last month. The company suffered a market downturn that has affected dozens of tech stocks. Yet, Alphabet remains a behemoth in the industry with an expanding role in AI that makes its stock a compelling investment.
The tech giant has had its work cut out for it, with the third-largest market share in cloud computing after Amazon Web Services and Microsoft's Azure. However, Alphabet has made impressive strides over the last year, adding a range of new AI tools to Google Cloud that have allowed it to outperform its competitors in growth.
In Q2 2024, Alphabet posted revenue gains of 13% year over year, mainly driven by a 29% spike in Google Cloud sales. Meanwhile, Google Cloud's operating income nearly tripled to more than $1 billion for the first time. For reference, AWS and Azure revenue both rose 19% year over year in the same quarter.
In addition to cloud computing, Alphabet is using its Pixel smartphone brand to further its position in AI. The company unveiled the Pixel 9 on Aug. 13, debuting it alongside a new Gemini-powered AI smart assistant. Gemini AI uses Alphabet's large language model (LLM) to offer Pixel 9 users new generative image, text, and voice features. The announcement came ahead of Apple 's iPhone event in September, which is expected to similarly announce a range of new AI features for its 2024 line of smartphones.
Data by YCharts.
Alphabet's stock is trading at a bargain after a sell-off. The chart above shows its forward P/E is significantly lower than Microsoft's or Amazon's, indicating that Alphabet is one of the best-valued AI cloud stocks in the market.
Alongside impressive growth in AI and a potent brand, Alphabet's stock is too good to ignore right now.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy .
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