Tech Sell-Off: Two AI Stocks That Are Screaming Buys Right Now

Artificial intelligence (AI) stocks have climbed in recent years amid excitement about the technology’s game-changing potential. Investors have been eager to get in on the leaders, from chip designers to cloud companies pouring cash into a massive infrastructure build-out. And that’s driven the tech-heavy Nasdaq Composite to record highs.

But various headwinds have weighed on the index’s momentum on occasion this year, from concern about higher energy prices to questions about the sustainability of spending on new data centers. And just this past week, some investors rushed to sell tech stocks following the U.S. midterm elections. Democrats, known for caution regarding AI, won majorities in the Senate and House of Representatives. Investors worry that lawmakers’ decisions may slow the pace of AI development through regulation or a slowdown in data center expansion, to name two examples.

That said, it’s important to keep in mind that this potential attention to the pace of AI growth may actually reduce risk — and that could benefit companies involved as well as shareholders. So, AI’s long-term picture still looks promising, and that means now is a great time to get in on quality players that have declined amid the tech sell-off. Here are two that are screaming buys.

1. Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing (TSM +5.00%) plays an essential role in the AI story as it makes most of the well-known chips that drive key AI tasks such as the training and inference of models. These include the chips designed by market giants such as Nvidia and Advanced Micro Devices. But TSMC doesn’t depend uniquely on AI chips for revenue; it also makes chips for smartphones, traditional PCs, smart home appliances, and more. The company holds more than 70% of the foundry market, according to Counterpoint Research.

So, while TSMC may greatly benefit from the AI boom, its other areas of focus may help support the revenue picture if the pace of AI development slows at any point.

For now, though, we can expect AI to boost growth as it’s done in recent quarters. Demand remains high, and in the latest quarter, TSMC said it sees increasing AI demand, driven by agentic AI. This is the application of AI to real-world problems, and chips are needed to fuel the AI’s thinking and actions.

Today, TSMC stock looks cheap at only 22x forward earnings estimates, after slipping recently — and this makes it a fantastic long-term buy.

2. Broadcom

Broadcom (AVGO +7.27%) is a player in the AI chip market, but its chips are different from the general-purpose GPUs of Nvidia or AMD. This player designs custom chips, or XPUs, built for a specific purpose, so they don’t compete directly with the chip giants I just mentioned. Broadcom has been delivering tremendous growth thanks to its work with major hyperscalers and customers such as AI labs OpenAI and Anthropic.

In Broadcom’s latest earnings call, it said that it expects Anthropic to become the company’s largest XPU customer next year. Broadcom also said that its AI revenue may reach $230 billion by the 2028 fiscal year. The recent quarter supports this trajectory, with AI semiconductor revenue climbing 221% to $16 billion amid record revenue, operating profit, and free cash flow.

And Broadcom also generates revenue from many networking products, including its leading switches and routers, used for AI and non-AI systems.

Right now, Broadcom looks particularly cheap as its valuation has dropped to 16x forward earnings estimates from more than 40x earlier this year. Broadcom’s well-established networking business, along with its strength in networking and custom chips, favors growth over the long term — and that makes the stock a screaming buy at today’s levels.