Nasdaq Post-Correction: My Top 3 AI Stocks to Buy Before They Soar

The Nasdaq, an index that roared higher over the past two years, spent most of March doing just the opposite. The benchmark slid into correction territory earlier in the month, meaning it fell more than 10% since its most recent high back in December. The reason for this shift? Investors worried that President Donald Trump's plan to impose a series of tariffs on imports could hurt growth at home. Growth-oriented stocks are particularly sensitive to the economic backdrop, so when uncertainty arises, they're often the first to decline.

But, in recent days, the picture has brightened. Trump's latest comments suggest a certain flexibility regarding the implementation of tariffs, so investors have grown hopeful that impact on companies and the economy may be limited. This optimism spurred gains in the Nasdaq, lifting it out of the correction zone earlier this week, though the index has shifted back periodically.

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The Nasdaq has recovered some recent losses, but many of its stocks still are trading at bargain -- or at least reasonable -- prices. And this includes players in the promising and high-growth area of artificial intelligence (AI). Let's check out three of my favorite AI stocks to buy before they soar.

Image source: Getty Images.

1. Palantir Technologies

Palantir Technologies (NASDAQ: PLTR) momentum seemed unstoppable until recent times. The AI software company posted the biggest gain in the S&P 500 last year, advancing 340%, and climbed to a record high in February. Investors have been excited about the company's double-digit revenue growth in its two businesses: government and commercial.

Palantir sells these customers AI-driven platforms that help them aggregate and make better use of their data. The results often can be extremely impressive, with improvements in efficiency, cost control, and more. I particularly like how Palantir has been able to consistently balance growth with profitability, and proof of this is the steady growth in its Rule of 40 score. A result of 40% or higher shows a company is doing a good job on the growth/profit balance. Palantir, with a recent score of 81%, clearly is hitting it out of the park.

Today, Palantir's forward price/earnings-to-growth (PEG) ratio, a valuation metric that considers growth, is 0.8. A reading under 1 suggests a stock may be undervalued. After the stock's 24% drop from its peak, now is a great time to hop on board.

2. Amazon

What I love about Amazon (NASDAQ: AMZN) is the fact that the company is using AI to improve its own business and selling AI products and services through its cloud-computing unit to generate revenue growth. So this e-commerce and cloud powerhouse is benefiting from AI across its operations. All of this has been bearing fruit, helping to lower Amazon's cost to serve in e-commerce and adding billions of dollars in revenue to its cloud earnings.

I expect this to continue considering Amazon Web Services' (AWS') dominance in the cloud market -- it's the No. 1 player globally -- and the enormous growth forecasts for the AI market. On top of this, we're in the early stages of the AI story as companies today build out platforms. We haven't yet reached the stage when applying AI to daily life is a regular thing for all companies. All of this means AI should drive AWS growth for years to come, and since AWS is Amazon's main profit driver, this is a big deal.

Today, Amazon shares trade for 32 times forward earnings estimates, down from 45 times just a few months ago -- a bargain for this AI stock that is ripe to head higher on any positive AI news.

3. Meta Platforms

Meta Platforms (NASDAQ: META) is mainly known for its family of apps that probably populate your phone -- from Facebook and Messenger to WhatsApp and Instagram. More than 3.3 billion people use at least one of these on a daily basis. Today, this social media dominance is helping Meta show its strengths in AI. The company launched Meta AI in 2023, and it's now the most used AI assistant worldwide.

How does Meta aim to win in AI? By introducing it across its platforms and fine-tuning AI assistants, for example, to serve the needs of users. This could prompt folks to spend more time on Meta's apps, thus driving advertisers to spend more and more of their dollars there to reach them. To accomplish this and other AI goals, Meta is investing big -- as much as $65 billion this year alone -- with the goals of constructing a massive data center and increasing its number of AI chips. The company also has designed its own large language model (LLM) and has made it open source -- a move that could position Meta for leadership in the AI industry.

Today, Meta stock trades for 24 times forward earnings estimates, down from a peak of 29 times a few weeks ago, a fantastic buying opportunity as this potential AI winner could surge at any moment.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Palantir Technologies. The Motley Fool has a disclosure policy.