AI Pullback? 4 Stocks to Buy on the Dip

AI stocks are getting hammered right now. This doesn't mean the AI boom is over, far from it. However, it does mean that some of the previous biggest winners in the AI space are suddenly trading at prices we've not seen in months or maybe even years. So, instead of running from the sell-off, I went looking for the best bargains I created. Gladly, I found four beaten-down AI stocks with strong fundamentals and serious rebound potential that I will share with you today. All are still sporting stellar growth prospects. All getting lots of love from Wall Street experts. All scoring highly from our proprietary quant model. And yes, all now much, much more attractively priced after the sell-off. I want to start off with the shares of Vertiv with the symbol VRT, but first, let me introduce myself. I'm C. Wright Neister, but everyone calls me Righty. I'm a partner at Wall Street Zen, where our quant rating system analyzes a wide array of data points to separate the best opportunities from all the noise and nonsense. If breakdowns like this are useful to you, then do me a quick favor and hit that like button. It tells the algorithm to show you more content like this in the future. Let me explain why Vertiv is such an exciting investment opportunity right now. If you pack a room full of the most powerful AI servers on the planet, then you find yourself in a space that is generating an enormous amount of heat on a 24/7 basis. If the cooling fails, the hardware fails. And if the power management fails, the hardware fails, right? As As such, these are not optional systems. They are prerequisite for everything else to work, and that is exactly where Vertiv comes in. Yes, they enjoyed some serious gains from the past given their tremendous growth prospects. But now, they are more than 20% off the highs begging us to take a [clears throat] deeper look to see if it's time to strike on these shares. Gladly, the answer to that is yes. The main reason is the demand shows no signs of slowing. In fact, the demand is not just wishful thinking. It is already under contract leading to a massive backlog of projects yet to be completed. This gives great visibility and confidence into future growth that is in general rewarded by the market with higher share prices. So, this juicy dip may not be be for much longer. The market also likes to reward consistent earnings prowess, and Vertiv has that in spades given 14 straight impressive earnings beats. Now, take a look at the chart I'm about to show you here, the earnings per share year-over-year change column. That's a really strong track record of outperformance, which is exactly what you want to see in a stock that you're buying. And Wall Street is all over this one. We're talking about deep bullish coverage. The 19 analysts covering Vertiv land on a consensus strong buy recommendation. The most notable target comes from the analyst over at Loop Capital, who sits in the top 6% of all analysts we track for his stock picking excellence. His target price calls for roughly 70% upside to the shares in the year ahead. Then we boil it all down to an intuitive letter grade of A through F. Indeed, you want your portfolio loaded with A-rated stocks as they historically outperform the S&P 500 by nearly 3:2:1. Now, Vertiv ranks a solid B rating, which amounts to a buy recommendation. And over the years, B-rated stocks have nearly doubled the S&P 500. Note that our coveted A ratings are reserved for just the top 5% of stocks. In this case, Vertiv is knocking on the door in the top seven, just a smidge outside. So, there is a lot of fundamental goodness packed into these shares that points to more upside potential ahead. Now, we can dig further into each stock's strength and weaknesses through the component grades, which groups those 115 factors into seven key areas. Now, let me demonstrate what I'm talking about here. Growth ranks in the top 21% of all stocks tracked. Then we have sentiment, the smart money indicator, a notch higher in the top 12%. The standard grade is for financial strength, all the way up in the top 2% of the entire market. Now, that top 2% financials grade is the number that anchors this whole pick. It is the proof of operational excellence that you would want from a business with this much contracted demand already on the books. Now, the catch with Vertiv is the same as all the other folks connected to the AI revolution. And that is if the AI spending slows down any bit at all, then all the stocks in the AI ecosystem will be pounded into submission. All current facts point to more and more growth ahead because the AI boom. This gives us a great chance to buy this essential player as shares have cooled off leading to a great investment potential. Yeah, cooled off, right? That's their strength. Vertiv keeps the lights on and the servers cool, but our next company is the one that actually builds the AI data center they all sit in. A quick aside before I get to that stock, if you enjoy discovering stocks aligned with current events like this one, then best thing you can do right now is to sign up for my next live training session this coming Monday. The focus is on timely market insights plus my top picks. Now, it's totally free, but you do need to sign up and you can do that now to join me this coming Monday. Just go to wallstreetszen.com/live. Our second stock today is Emcor Group with the symbol EME. Now, data centers do not arise from immaculate conception. Somebody needs to physically build the data center around them. The electrical systems, the mechanical systems, the cooling infrastructure, right? One of the biggest in that space is Emcor and the one the hyperscalers call time and time again when they want to put out new data centers, right? Here again, we have a nice dip from the highs even though the business is putting up record results. Just like the last stock Vertiv, a big part of the story here is about the staggering backlog. The pile of signed contracted work waiting to be done just hit a record $17 billion up nearly 44% over last year. That is a huge growing fountain of future profitability. The strength of this demand for their services shows up in their 35% earnings growth, which is much, much higher than the industry average. This is not a one-quarter phenomenon. That's because they have beaten earnings estimates for 16 quarters in a row, four straight years. Remember, each beat came with higher expectations for the future and yet they had no problem leaping over that higher hurdle each and every time. Now, the Zen Rings Quant model is picking up what Emcor is putting down. That's because they also earn a B rating. In this case, they are in the top of all stocks after that full 115 fundamental factor review. Now, that's just a smidge outside that top 5% threshold for a rate stock. So, perhaps we're better off calling this an A- minus or a B plus selection. The component grades reveal more strength starting with our proprietary AI factor where M core is in the top 7% of all stock. And a quick note on that AI grade because it trips up a lot of people. It's not measuring how much artificial intelligence the company is involved with. It is our system's use of AI to pinpoint stocks with the highest likelihood to outperform the market. So, M core is indeed throwing off the right signals right now. Then we have top 5% showing for financial strength and the standout is the top 2% showing for sentiment. This tells you the smart money is already on board these shares. The risk watch out here is about customer concentration. M core's fortunes are tied to the data center building boom. So, if you see that backlog begin to soften or moderate even a little bit, then it's worth re-examining the investment thesis that we talked about today. For now, with that record backlog, with the earnings beat after beat after beat, and a Thomson rating with the smart money leading in, that's a picture of a company firing on all cylinders. And the best part is the buy the dip opportunity in front of us right now. So, M core builds the data centers, Vertiv cools it, but none of it runs without something we will discuss with our third stock. So, quick ask before we get to that big reveal, if you're getting value out of this video, then do yourself a favor and hit the subscribe button and the notification bell. Those actions help ensure you see my future videos. Next up is our third AI buy the dip opportunity in Microchip Technology with a symbol of MCHP. Here's the basic story. Um all the attention in chip goes to the big flashy names running the AI models, Nvidia and the like. But there is a whole layer underneath, the humble embedded chips that run in the physical world, the controllers inside the equipment, the sensors, the systems that keep everything talking to each other. That is Microchip's world. And after a brutal downturn in the chip cycle. This business is turning the corner into a serious profitability as the stock is oddly getting cheaper. Microchip is down about 20% from the recent highs. Yeah, that's often a sign of trouble ahead, but here's why it could be the exact opposite. The company's climbing out of a cyclical trough and the recovery in earnings is just getting started. Now, Wall Street experts currently expect Microchip's earnings to grow at over 90% a year going forward, several times the rate of industry average. A recovering chipmaker with growth like that ahead of it trading a quarter below its highs, that is the kind of setup this video is all about. There's a lot of Wall Street support for these shares. All in all, there are nine analysts pounding the table with buy and strong buy recommendations. The average price target implies an upside of almost 40%, but the street high price target is calling for nearly 70% gain in the year ahead. The Zenger ratings confirms the excitement on Wall Street as it scores in the top 6% of all stocks based upon their stellar fundamental profile. Now, just like the last stock, this amounts to a beer rating, just a whisper outside the A-rated territory, which is safe for the top 5%. Time to pop the hood and see what's underneath via the component grades. Financials comes in the top 20% of all stocks, then we have sentiment a step higher in the top 13%, and finally the standout grade is for growth, exactly what you want to be in the top 6% of all stocks. This is based upon 22 different measures of growth that greatly increase the odds of more beaten race earnings reports ahead, which is one of the best drivers of share prices. There are few things more appealing in the investment world than a turnaround, as it often leads to excess earnings growth and outsized share price gains. Now, layer on top the extra growth that is coming their way from the AI boom, and you understand why this is a favorite on both Wall Street and from our Zenger ratings quant model. We are down to the top of the leaderboard now, the single highest rated stock in the entire video today, and that comes up in just a moment. But before I get to it, just one quick thing. You want to stay one step ahead of the market, then join me live every Monday, because that's when I share my updated market outlook and trading plan to outperform. It's also when I unveil my trade of the week based upon our proven Zen Ring's Quant model and my greater than 40 years of investing experience. It's a free event, but you do need to register. Just go to wallstreetzen.com/live or click the link in the description down below or scan the QR code on the screen, whichever side my body it's on. Just pause the video for a moment to sign up. I can be patient and wait for you and then I look forward to seeing you there on Monday. That lives up to the heading of saving the best for last. Here is something you almost never see. The highest rated stock in this whole video just fell around 25% in just the past month and yet the business behind it appears to be stronger than ever. That brings us to Extreme Networks with the symbol of EXTR. Now, all that data moving through AI data centers needs a fast, secure network. Extreme builds them and as more of the world moves to the cloud, demand for those type of networks will only grow as well. Now, let's look at why the stock is down more than 25% in recent days. The short version is that got caught up in the AI sell-off along with everything else. Not because anything broke, but because the whole group was due for a round of profit taking after the massive gains that occurred before that. And herein lies the investment opportunity. Here we have extreme growth. Yes, pun intended, but the 145% expected earnings growth is no laughing matter. That is 10 times the growth of the average stock these days. Growth like that doesn't come around often, only making the buy the dip opportunity that much more attractive. This company has a veritable who's who of top Wall Street analyst support. This includes Mike Genovese from Rosenblatt, who ranks in the top 1% of over 5,000 analysts for his stock picking prowess. He not only has a strong buy recommendation, but is also pounding the table with a street high target price 60% above current levels. The point is that when Mike highlights a stock like this, it's is smart to pay attention. Now for the moment of truth, we have our first elite A rated stock from our proprietary quant model. This amounts to a strong buy recommendation, which is fitting as A-rated stocks have outperformed the S&P 500 by nearly 3:1 over the years. And as you might expect, the standout fundamental profile shows up broadly across their component grades. Let's start with value in the top 22% of all stocks. Momentum stands right alongside in the top 22% as well. Then growth is a notch higher in the top 14%. Then we round it out with financial strength in the top 9% of all stocks reviewed. We all love growth stocks, especially ones growing 140% a year. But to combine that with impressive value sets us up for a truly exciting investment opportunity. The time may of which only got more attractive because the broad AI sell-off that is showing signs of ending. So, if this setup appeals to you, then you might want to move on it pretty soon. So, there is your potential shopping list for the timely AI pullback. Do you remember that the Zen ratings are updated daily. You can pull a free rating on over 4,600 stocks yourself just by typing in a ticker at wallstreetszen.com. to bookmark the site for all your future visits. I want to hear from you, which of these four stocks are your favorite buy the dip opportunity? And are there any AI names I left off that you are watching that I should consider for future videos? Now, drop it all in the comment section below and let's talk it through. And if you're on the hunt for more fresh discounts, then check out the video that's popping up on your screen right now. In that one, I went through four stocks trading near their 52-week lows that have massive upside potential. Now, go check it out now.