Why AI Stocks Nvidia and Alphabet Present Notable Buying Opportunities

Artificial intelligence (AI) stocks have surged over the past few years, significantly bolstering the performance of the S&P 500. The driving force behind this enthusiasm is AI’s potential to transform industries, helping companies cut costs, enhance efficiency, and facilitate groundbreaking discoveries, particularly in healthcare and pharmaceuticals.

This transformative technology stands to generate substantial earnings for early adopters. Savvy investors recognize that by investing in leading AI players, they can position themselves well for future growth. Consequently, many have targeted companies that produce essential AI development tools or apply AI in their operations.

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However, one concern has emerged: the valuations of many AI stocks have risen sharply, leading some investors to question if the AI buying opportunity has passed. Yet, there is good news for bargain hunters. Recent market declines have pushed some quality AI stocks into attractive price ranges, creating buying opportunities that should not be overlooked. Despite potential economic challenges or regulatory changes, the long-term outlook for AI companies remains positive. Current projections estimate that the $200 billion AI market could exceed $1 trillion by the end of the decade.

Now, let’s examine two AI giants that currently offer attractive buying opportunities.

Image source: Getty Images.

1. Nvidia

Many might not expect to see the star AI stock Nvidia (NASDAQ: NVDA) listed as a buying opportunity. After a succession of impressive quarterly earnings reports and exceptional stock performance, Nvidia might seem overpriced. However, the stock has not entered excessively high territory, and it is currently available at what could be considered a bargain price. Let’s explore why this company merits a place in your portfolio.

Nvidia is a prominent market leader with a strong commitment to innovation, which has propelled its profitability over time—even during challenging product launch phases. Its latest Blackwell architecture launch has helped maintain a gross margin above 70%.

Significantly, Nvidia manufactures the fastest chips essential for AI tasks like model training. Major tech companies, including Microsoft and Meta Platforms, are among its customers, all vying for the best technology to maintain a competitive edge in AI. These customers have the financial robustness to invest in Nvidia’s advanced products, reinforcing the company’s positive outlook.

As for Nvidia’s current valuation, its stock trades at a remarkably low multiple—25 times forward earnings estimates—down from a high of 48 in January. Given these advantages, Nvidia is an appealing buy for any investor focused on AI.

2. Alphabet

Most recognize Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) as the parent company of Google Search, the world’s leading search engine, which generates billions in revenue from advertising. However, Alphabet has another rapidly growing revenue stream: Google Cloud.

In its most recent quarter, Google Cloud reported a remarkable 30% revenue increase, reaching $12 billion. Much of this growth is driven by substantial investments in AI.

Alphabet’s diverse AI products and services have been enhancing its offerings, including the development of its own large language model (LLM), Gemini. This model not only supports customer needs but also strengthens Google’s own operations, enhancing the effectiveness of Google Search.

This year, Alphabet plans to invest $75 billion in capital expenditures to further enhance its AI capabilities, positioning itself for future growth in this sector.

Currently, shares of Alphabet trade at just 19 times forward earnings estimates—down from over 24 in December—making this an excellent entry point for investors keen on an AI market leader at a fair price.

Should you invest $1,000 in Nvidia right now?

Before deciding to purchase stock in Nvidia, consider the following:

The Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks for potential investment… and Nvidia was not on that list. The selected stocks may deliver significant returns over the coming years.

For context, consider that if you had invested $1,000 in Nvidia when it first made the Stock Advisor list on April 15, 2005, you would have $718,876!*

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Randi Zuckerberg, a former market development director at Facebook and sister to Meta Platforms CEO Mark Zuckerberg, serves on The Motley Fool’s board. Suzanne Frey, an Alphabet executive, is also a board member. Adria Cimino does not hold positions in any of the stocks mentioned. The Motley Fool maintains positions in and recommends Alphabet, Meta Platforms, Microsoft, and Nvidia. 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 adheres to a strict disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.