The artificial intelligence (AI) sector has seen some volatility recently, with stock prices of leading companies experiencing pullbacks. This market adjustment, however, presents an opportunity for long-term investors to identify potential buys. This article highlights three AI stocks to watch closely this month.
1. Nvidia
Despite reporting another quarter of substantial revenue growth, Nvidia (NVDA) hasn’t been immune to the recent market sell-off. The stock is down approximately 25% from its January high. Nevertheless, Nvidia remains strategically positioned to capitalize on the escalating investment in AI infrastructure. Cloud computing companies are leading the way, with Amazon allocating around $100 billion in capital expenditures (capex) this year to expand its AI data centers, followed by Microsoft with $80 billion and Alphabet with $75 billion. Meta Platforms is also investing heavily, with up to $65 billion in capex, primarily for AI infrastructure. A consortium including OpenAI and SoftBank plans to spend $500 billion over the next few years on AI infrastructure through Project Stargate.
Nvidia is the foremost designer of graphics processing units (GPUs), essential for training and running AI models. The company has achieved a 90% share of the GPU market with its CUDA software, a platform that originally allowed developers to program these chips for tasks beyond their original purpose. Over the years, Nvidia has developed a comprehensive collection of AI libraries and microservices. While some companies are using custom AI chips, they typically use them in conjunction with GPUs due to the flexibility and availability of the latter. The recent sell-off has led to an attractive forward price-to-earnings ratio (P/E) of 25.5 times based on 2025 analysts’ estimates, and a price/earnings-to-growth (PEG) of under 0.5 — a PEG below 1 generally suggests undervaluation.
2. Amazon
While Amazon is often associated with e-commerce, it is fundamentally a technology company. Its cloud computing unit, Amazon Web Services (AWS), is the largest contributor to its profits. AWS, which pioneered the infrastructure-as-a-service model, remains the leading cloud computing provider by market share. It is also the company’s fastest-growing segment, with revenue up 19% to $28.8 billion last quarter, while its operating income increased 47% to $10.6 billion.
AWS’ solid operating leverage is supported by Amazon’s development of custom AI chips, known as ASICs (application-specific integrated circuits). These chips excel in performing specialized tasks with greater efficiency, though they have limitations compared to the flexibility of GPUs. Amazon reportedly led the design of these chips while licensing technology from Marvell, which gives the company a cost advantage. Customers use AWS and its services to build their own AI applications thanks to leading foundational models, which are offered from the beginning. Amazon’s SageMaker platform allows users to customize and train their AI models, as well as move them into production. AWS has faced capacity constraints and is set to invest $100 billion in AI data centers this year to meet demand. Amazon has a history of making significant investments and is spearheading initiatives in this area. Their stock is down about 15% from recent highs and currently has an attractive forward P/E of 32.
3. Salesforce
Shifting to the software side of AI, Salesforce (CRM) presents a solid investment opportunity, with the stock price down 20% from its recent highs. This customer relationship management (CRM) software company aims to lead the way in agentic AI, developing AI agents capable of completing tasks with minimal human supervision. Salesforce’s new agentic AI product, Agentforce, launched in October 2024 and had a strong introduction. Salesforce reports 5,000 deals in place, including 3,000 that are already paying customers. Agentforce provides customers with various pre-built AI agents and offers tools for creating custom agents through no-code and low-code options. Earlier this month, Salesforce launched AgentExchange, a new Agentforce marketplace that has already signed up more than 200 partners. Leading software companies like Workday, Docusign, and Box have already joined the AgentExchange. Agentforce costs $2 per interaction, presenting a significant growth opportunity for Salesforce as it expands its agents. If the company can improve user productivity and reduce costs, it will likely be a major growth driver for Salesforce in the coming years. The stock’s valuation is attractive, with a P/E of 26 times based on 2025 analyst earnings estimates, and a PEG of 0.35.
