What are the 3 top artificial intelligence (ai) stocks to buy right now?

Navigating the AI Investment Landscape: Three Top Stocks to Consider Now

The artificial intelligence (AI) revolution is undeniably upon us, driving significant growth across the stock market. With major indexes reaching new highs, much of this upward momentum is fueled by the immense capital flowing into AI infrastructure. Experts project a multi-trillion-dollar AI industry, making it a pivotal area for investors. However, it’s crucial to invest wisely, keeping an eye on valuations even as excitement builds. We've identified three AI leaders that currently offer attractive entry points, making them compelling buys right now.

1. Advanced Micro Devices (AMD): Challenging the AI Chip Giant

The demand for powerful chips to train and run sophisticated AI models has been a dominant trend. While Nvidia has largely commanded this market, Advanced Micro Devices (AMD) is emerging as a formidable contender, poised to capture significant market share. Companies are investing billions into AI, and they demand a substantial return on these expensive outlays.

AMD is presenting a compelling pathway to cost efficiency. For example, its Instinct MI355X chip boasts a claim of producing up to 40% more AI output (tokens) per dollar compared to Nvidia’s equivalent offerings. AMD’s CEO, Lisa Su, recently highlighted that seven of the top ten model builders and AI companies are already utilizing AMD's Instinct chips. Looking ahead, the much-anticipated MI400 chip is expected to deliver more than double the compute power and nearly two and a half times the bandwidth of the current generation, representing a massive leap in performance that could draw even more critical customers.

From a valuation perspective, AMD's stock currently trades at a price-to-sales ratio of just under 10. This is remarkably lower, roughly one-third, of Nvidia’s current valuation. While Nvidia has certainly earned its premium to date, AMD offers a significant opportunity for investors if it successfully chips away at Nvidia's data center dominance, which analysts have estimated to be as high as 92% of the market. Diversifying the supply chain for AI hardware is a logical step for large enterprises, and AMD is positioned to capitalize on this need.

2. ASML: The Indispensable Monopoly in Chip Manufacturing

As AI chips become increasingly complex, so do the specialized tools required to produce them. ASML stands alone as the world’s sole designer and producer of extreme ultraviolet (EUV) light lithography machines. These sophisticated systems use light to print microscopic patterns onto silicon wafers, a process absolutely critical for manufacturing the high-end chips that power today’s advanced AI data centers.

Despite its indispensable position, ASML's stock has seen a significant pullback, currently trading over 30% below its peak. This decline is largely attributed to geopolitical tensions and tariffs, which management has warned could impact ASML’s business into 2026. While these near-term challenges are not ideal, they may have created a unique buying opportunity. AI chip companies operate with multi-year roadmaps, and the foundries responsible for manufacturing these cutting-edge chips will continue to require ASML’s advanced machinery for years to come.

Even with Wall Street analysts adjusting their long-term expectations due to current headwinds, they still project annualized earnings growth for ASML exceeding 16%. The stock’s price-to-earnings ratio of 28 is quite reasonable given this growth potential, and it could prove to be a bargain in hindsight if the geopolitical climate improves and ASML surpasses these tempered expectations. The company's unassailable monopoly on these crucial EUV lithography machines makes it a compelling "leap of faith" investment for those looking at the foundational aspects of the AI industry.

3. Alphabet (GOOG, GOOGL): A Resilient and Multifaceted AI Powerhouse

Google’s parent company, Alphabet, has faced its share of skepticism, from antitrust litigation concerning its core search business to questions about the long-term impact of AI chatbots like ChatGPT on Google Search. However, Alphabet has consistently demonstrated its ability to rise to these challenges.

While the outcomes of its antitrust litigation are yet to be fully determined, Google Search continues to perform robustly, with its business unit revenue climbing an impressive 12% year-over-year in the second quarter. Beyond search, Alphabet’s other segments are also thriving, propelled by AI momentum. Google Cloud revenue surged by 32%, showcasing its strength in enterprise AI solutions. Furthermore, its autonomous ride-hailing business, Waymo, is steadily expanding its footprint across the United States, demonstrating practical applications of AI in real-world services.

Alphabet remains a diverse and powerful play on AI and a multitude of other technology trends. Although its stock has recently rebounded to near new highs, it still presents a compelling buying opportunity. Shares trade at a price-to-earnings ratio of less than 22, which is an excellent valuation for a business that analysts expect to deliver an annualized earnings growth rate of almost 15% moving forward. Alphabet’s enduring innovation and broad AI integration make it a strong core holding for any AI-focused portfolio.

Invest Smartly in the AI Revolution

The AI revolution is here to stay, and investing in companies at the forefront of this transformation can yield significant rewards. By focusing on robust businesses with strong fundamentals and attractive valuations, like Advanced Micro Devices, ASML, and Alphabet, investors can position themselves for long-term success in this exciting technological era. Remember to conduct your own due diligence and consider these opportunities as part of a diversified investment strategy.