2 Magnificent Artificial Intelligence (AI) Stocks Down 16% to 28% to Buy Hand Over Fist
Keithen Drury, The Motley Fool
Fri, July 10, 2026 at 2:05 PM GMT+5:30
4 min read
- NVDA
-0.66% - MSFT
+0.27%
There are several great artificial intelligence (AI) stocks on sale right now. Two that I’m most excited about are Nvidia (NASDAQ: NVDA) and Microsoft (NASDAQ: MSFT). These two recently were down 16% and 29%, respectively, from their all-time highs, yet have a ton of momentum and could easily return them to new highs before 2026 is over
The future is bright for each of these leaders, and it makes sense to load up on shares before the market cycles back to valuing them highly again
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Microsoft
Microsoft is an established company that’s implementing its AI strategy, and so far, it appears to be working
Copilot, its AI assistant tool for its suite of business productivity software, is a hit and part of an AI business that is generating $37 billion in annual recurring revenue, growing at a 123% year-over-year pace. Its cloud platform, Azure, is also crushing it with 40% growth, mostly thanks to being a great place to build AI applications
Overall, Microsoft’s revenue rose 18% in its latest quarter, with diluted earnings per share (EPS) rising 23% year over year. Those are solid results, and easily are better than your average stock in the S&P 500(SNPINDEX: ^GSPC). However, that’s not how the market is valuing the stock. The S&P 500 trades for about 21.7 times forward earnings. Microsoft trades for just 20
After spending the better part of three years trading at 30 times forward earnings, this is certainly a cheap price to pay for a company that’s still doing quite well. While I’m unsure if Microsoft can rise and reclaim its 30 times forward earnings price tag, I think rising to around 25 times forward earnings is feasible, as this is a level where many of Microsoft’s big tech peers trade around
If Microsoft can report a solid quarter in a few weeks, I’m confident the stock can rise quickly and regain some of the ground it has lost. As a result, Microsoft is a bit of a time-sensitive investment as this deal won’t last forever
Nvidia
Nvidia is nearly in the same boat as Microsoft. While it trades for about the same price tag as the S&P 500, 21.9 times forward earnings, it trades for a mere 15.4 times next year’s earnings
What does that mean? Well, if Nvidia’s stock price were to stay flat from now until the end of its next fiscal year (FY 2028, ending January 2028), Nvidia’s stock would trade for 15.4 times trailing earnings — a very cheap stock price that indicates a downturn could be coming. However, that’s not the case
