Investing in AI Stocks: Opportunities Amid Market Volatility

The global equity markets are currently experiencing high volatility, largely due to ongoing geopolitical tensions and trade disputes. Stocks in the artificial intelligence (AI) sector are also facing corrections in their valuations. However, the long-term growth trajectories of AI-powered companies, particularly those leveraging scalable, cutting-edge technologies, remain promising.

Investors can capitalize on this market instability by making small investments in fundamentally solid AI stocks that possess sustainable competitive advantages. Companies like Meta Platforms (NASDAQ: META), Broadcom (NASDAQ: AVGO), and Palantir Technologies (NASDAQ: PLTR) present compelling opportunities. Here’s why buying and holding these stocks for the next decade could prove beneficial for retail investors.

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Meta Platforms: Capturing the Digital Advertising Market

Meta Platforms boasts an extensive user base of over 3.3 billion daily active users across its Family of Apps, including Facebook, Instagram, WhatsApp, Threads, and Messenger. This unparalleled reach positions Meta firmly at the forefront of the global digital advertising market.

The vast data generated by its user base enables Meta to utilize advanced AI algorithms effectively, enhancing content recommendations and boosting user engagement. This leads to more precise ad targeting and improved returns on investment for advertisers, thereby attracting a larger customer base and solidifying Meta’s strong network effects.

Meta is implementing a comprehensive AI strategy. This includes investments in AI applications, models, and infrastructure. The company’s personalized AI assistant, Meta AI, serves 700 million monthly users. Additionally, Meta is developing an open-source Llama model series, aiming to engage developers and enterprises within its ecosystem. Looking ahead, Meta has earmarked $60 billion to $65 billion in capital expenditures for 2025, a sizable portion of which is dedicated to expanding its data center capacity.

Currently, Meta trades at 22.3 times earnings, which is below its five-year historical average of 25.3 times. Analysts at RBC Capital predict that the company’s earnings will increase by an annual rate of 15% to 20% in the long term, post-completion of its AI investments.

This current valuation dip offers a promising entry point for investors looking to tap into the long-term growth potential of AI.

Broadcom: Leading in AI-Optimized Solutions

Broadcom has transformed itself into a leader in the AI sector by developing custom AI-optimized accelerators (XPUs) tailored for hyperscaler AI workloads. The company provides the next-generation networking infrastructure required for large-scale AI deployments. Following its successful acquisition of VMware, 70% of the largest 10,000 customers have adopted the VMware Cloud Foundation platform, facilitating the creation of virtualized data centers and private cloud environments.

The robust ecosystem surrounding its hardware and software has contributed to a thriving AI business, which saw a remarkable 77% year-over-year revenue increase, reaching $4.1 billion in the first quarter of fiscal 2025 (ending February 2, 2025).

Looking ahead, management expects a serviceable addressable market (SAM) ranging from $60 billion to $90 billion purely from three major hyperscaler clients by 2027. Furthermore, the company is in early discussions with four additional hyperscalers, potentially expanding its SAM further.

Despite this impressive growth, Broadcom is currently trading at 27.8 times forward earnings, significantly lower than its historical average of 70.7 times. This suggests that the company’s valuation could improve, as analysts anticipate annual earnings growth of 26.6% in the coming years.

Now presents an advantageous opportunity for investors to enter a solid growth stock at a reduced price.

Palantir Technologies: Innovating Data Analytics

Palantir specializes in AI-powered data analytics tools for government and commercial clients. Its software processes vast amounts of data from diverse sources, generating actionable insights. A unique aspect of Palantir’s offering is its proprietary ontology system, which defines digital relationships between real-world and digital assets, creating a significant competitive moat.

The company’s diverse software solutions, including Gotham, Foundry, and the new Artificial Intelligence Platform (AIP), have positioned it as an AI-powered operating system for modern enterprises.

AIP is particularly noteworthy as a growth catalyst; rather than simply developing better models, it focuses on helping clients implement AI applications to solve practical challenges.

Palantir’s stock is currently down nearly 30% from its all-time high in February 2025, impacted by reductions in defense spending, CEO Alex Karp’s $1.9 billion stake sale since early 2024, and heightened macroeconomic uncertainty attributed to U.S. tariff policies.

Despite these challenges, the stock trades at a high 161.3 times forward earnings. While this valuation appears steep, high-growth stocks often carry elevated valuations for extended periods. Analysts forecast long-term revenue and earnings growth of 21.4% and 27.7% respectively, making the current valuation potentially more acceptable in time.

Inclusion of Palantir in an AI-focused investment portfolio could yield substantial exposure to enterprise software innovation.