Last Monday’s market rout saw tech stocks, specifically AI stocks experience major selloffs as investors across the board decided to take profits from overvalued positions.
In fact, for many of the companies that experienced the correction, the selloff was a long time coming. As such, oversold AI stocks could be poised for a strong comeback as investors flock back to bullish sentiments on AI.
Moreover, these three AI stocks could see their prospects improve as a result of broader tech success beyond the news-cathing AI products. As a result, these companies might offer investors more long-term stability than companies that trade as pure plays in AI.
However, as a word of caution, the market itself has not escaped the downward pressures of a potential U.S. recession. This means that at any time, these stocks could experience another downturn as the one seen last week.
As such, investors should look cautiously upon these three AI stocks with potential comebacks in the making.
Monday.com (MNDY)
As a provider of project management software, Monday.com (NASDAQ:MNDY) doesn’t seem like one of the most obvious plays among AI stocks, its prospects appear strong to most analysts. Much of the recent excitement comes from the company’s exceptional second-quarter earnings report.
Specifically, the company excelled in revenue growth and soaring net income.
As a result, the company posted a beat of EPS expectations by 67% with a more modest revenue beat around 3%. This has turned broader media attention positive on the stock, with investors buying into it after last week’s tech selloff left it slightly discounted.
Moreover, the company’s notable metrics increases in net dollar retention rate which came in at 110% overall suggest it will not struggle to keep up this momentum heading into the next quarter. This could bode exceptionally well for investors who buy in during this comeback run.
Meta Platforms (META)
With heavy investment into AI spending, Meta Platforms (NASDAQ:META) has a lot to gain from a comeback story, though its stock did not suffer as much last week as others.
Having largely avoided a major loss in value, Meta has more of a solid upward trajectory ahead of it rather than s standard comeback.
Much of the company’s momentum has come from healthy increases in valuation as its fundamentals continue to project serious growth. This, alongside major news about its augmented reality projects and AI platforms, could push the stock even higher by the end of the year. This makes the $600 mark possible in the face of continued growth.
Furthermore, the company has successfully pulled off a pivot from the standard social media image to one of a tech investment firm working to push the edges of innovation. As such, investors should seriously consider Meta stock as a strong option for a growth-focused portfolio.
Amazon (AMZN)
When it comes to AI stocks, no company has as much flexibility, thanks to diverse revenue streams as Amazon (NASDAQ:AMZN) does. That’s because recently, the company has shown dominant sales performance, despite the slowing consumer market. Moreover, many of its services are still in demand, thanks to a 14% increase year-over-year in service revenues.
As such, through its strong data collection efforts with Amazon web services, AMZN stock is likely to have no issues with recovering from last week’s text stock so off. Looking at the companies price to earnings ratio of 40x, it’s likely that Amazon will be able to sustain further growth once it goes back on the uptrend following last week’s market crash.
Amazon’s expansion could, however, slow. This would be the case if the U.S. enters a full recession, or if the Federal Reserve does not cut interest rates over the next few months, both of which cases are likely.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
