Forget the Correction: AI's Unstoppable Momentum Creates Buying Opportunities

Navigating the capital markets has been quite a doozy so far this year. While gains seen across both the S&P 500 and Nasdaq Composite initially carried over into 2025, multiple sell-offs in megacap tech stocks over the last month have dragged the markets into correction territory now.

Investing in the stock market can be an emotional exercise and, at times, it can be intimidating. During periods of pronounced selling, it's not uncommon for investors to sit on the sidelines and hoard cash.

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Looked at through a different lens, many investors actually enjoy buying stocks when the markets are rocking higher. Think about that for a minute: Why would you prefer to chase stocks at soaring valuations but actively pause your investment activity when prices are normalizing?

In my eyes, these dynamics follow the famous Warren Buffett advice of being greedy when others are fearful and being fearful when others are greedy.

Right now, I think that there is a lot of fear manifesting itself throughout the stock market -- as evidenced by these precipitous stock declines. Below, I'm going to detail why I think the current panic selling is overblown and make the case for why the stock market correction is a great buying opportunity.

Big tech is on a spending spree

Over the last month or so, the capital markets have been plagued by a series of events that have led some investors to run for the hills. Whether it was the emergence of Chinese start-up DeepSeek or President Donald Trump's new tariffs, uncertainty around how these situations will play out in the long run has investors collectively hitting the panic button.

Yet despite these new storylines, underlying trends suggest that the artificial intelligence (AI) landscape remains quite strong. Data from a new Morgan Stanley report suggests that revenue from generative AI services could eclipse $1.1 trillion by 2028 -- up from just $45 billion last year. Within this figure, Morgan Stanley is forecasting that roughly $400 billion in sales will come from enterprise software. I see the rise in corporate spend for AI software as a particularly bullish catalyst for data analytics expert Palantir Technologies, which has not been immune to the ongoing stock market sell-off.

In addition to software, soaring demand for graphics processing units (GPUs) and data centers represents another lucrative opportunity over the next several years. By 2028, Morgan Stanley is calling for $280 billion in semiconductor spending and another $276 billion for high-bandwidth memory storage and networking equipment.

To get an idea of how realistic these projections are, let's take a look at what big tech is doing.

1. Hyperscalers: Cloud hyperscalers Amazon, Alphabet, and Microsoft are collectively planning to spend up to more than $250 billion on AI infrastructure just this year.
2. Betting big on America: iPhone maker Apple recently announced that it is planning to spend $500 billion here in the U.S. on various aspects of the AI movement, from manufacturing to advanced silicon engineering, over the next four years.
3. The rise of foundry services: Nvidia (NASDAQ: NVDA), AMD, Broadcom, and many others rely on the fabrication services of Taiwan Semiconductor Manufacturing to actually make their chipsets and integrated systems. While Taiwan Semi is already building a $65 billion facility in Phoenix, the company recently announced that it is committing to an additional $100 billion infrastructure investment in the U.S. to further expand its footprint and strengthen operational relationships with its customers.
4. Follow the breadcrumbs: For most of the last couple of years, Nvidia has dominated the GPU and data center opportunities -- largely due to a lack of competition. However, AMD has quietly started scaling its own data center chip business, and early successes with Meta Platforms, Microsoft, and Oracle indicate that demand for chips and continuous investment in data center infrastructure is going to be a theme for the foreseeable future -- validating Morgan Stanley's bullish forecasts.

Image source: Nvidia.

Stocks are on sale right now

The chart below illustrates the percentage change among each company referenced above. With the exception of Palantir, which has experienced a pronounced retracement of its own, nearly all of the other tech stocks in this article have dropped considerably more than the S&P 500 and Nasdaq so far in 2025.

NVDA Total Return Level data by YCharts

If I had to whittle down each stock analyzed in this piece to a smaller cohort, I'd choose Nvidia, AMD, Taiwan Semi, Amazon, and Alphabet as my top opportunities from a valuation perspective.

As the trends below illustrate, prices have shown some signs of normalizing and the relative contractions among valuation multiples make now a good opportunity to take advantage of prolonged selling. The obvious growth ambitions of each of these companies are underscored by their decisions to double down on spending and AI development.

NVDA PE Ratio (Forward) data by YCharts

When in doubt, zoom out

If something detrimental were occurring in the underlying operations for the businesses explored above, I think it would be highly unlikely that they would continue investing billions in research and development and new product innovations. To me, the ongoing spend in infrastructure represents a compelling secular tailwind for both AI software and hardware enterprises over the course of the next several years.

Although watching the value of your portfolio go down can be jarring, stock market corrections can actually be quite healthy. For the last two years, AI has fueled unprecedented interest in technology stocks -- thereby fueling the S&P 500 and Nasdaq to multiple record highs.

At some point, investors were going to find a reason to begin selling. While growth stocks can be particularly vulnerable during sell-offs, these opportunities also provide a rare chance for investors to scoop up some of the most in-demand names at discounted prices.

Don’t miss this second chance at a potentially lucrative opportunity

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• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $305,226!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $41,382!*
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

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*Stock Advisor returns as of March 24, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft, Nvidia, Oracle, Palantir Technologies, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and 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.