7 Stocks to Buy When the AI Bubble Turns 2000

The AI bubble is turning 2000. Last week we watched the weakest links, Core Weave, Nevius, and Oracle crash more than 20%. The clearest warning sign yet that the dot com disaster could happen again. I'm going to reveal the signs, when I think this bubble finally burst, and the seven stocks that could come out stronger to be the next Amazon, including one with a 130% upside to analyst targets. To do this, I have to take you back, way back to the year 2000. I'm a corporal working in the armory at the recruit depot Paris Island. The world is just happy that Y2K didn't send us all back to the stone ages. In fact, the internet was making us all rich. The Nasdaq index of all those dot com stocks was up 555% in the six years from 1994, more than six times your money. That was trillions of dollars in wealth created on the idea that the internet and the companies involved would change our lives. Companies like Lucent Technologies, Cisco, and Nortel were the picks and shovels play, supplying the networking equipment and the infrastructure to that internet revolution. The stocks rocketing four and 500% just in their four years from 1996. But then reality caught in. The Fed had already started raising interest rates. Money got more expensive, and those dot com companies ran out of funding. The internet just wasn't creating this a utopian dream, and revenue collapsed for these market darlings. Shares of Lucent plunged 99% from the peak, and by 2006 had to sell itself to Alcatel at a fire sale price just to avoid bankruptcy. But where this little walk down memory lane gets interesting is that crash took everything down with it, from the companies building the internet to those using it. But one of these groups was going to become a massive opportunity. Case in point, it took shares of Oracle 15 years to retake that 2000 peak, and investors saw next to nothing for another five years after that. Amazon was a different story, though. Amazon was revolutionizing retail, taking it online. Now, it didn't matter initially, as that crash took all things net down with it, crushing the shares by 94% from the peak to 2001. But then investors were proved right that the internet would change the world. It just wasn't fast enough to justify those 2,000 level stock prices, but it did happen and stocks like Amazon that were making it happen surged while Oracle investors were waiting for their money back. Shares of Amazon jumped 869% in that 15 years and and have gone on to 7,700% over the 25 years. That is 76 times your money. Now, fast forward to last week and for me it was déjà vu all over again. That same dot-com disaster bespelled AI. The Fed has started raising interest rates. Investors are calling into question the revenue to the AI boom and neo-cloud stocks crashed. Shares of Oracle ticker ORCL held up relatively well this time down just 8% while the other three major neo-cloud providers Iron, Nebius NBIAS, and Corweave CRWV were all down more than 20% on the week. Understand those neo-cloud companies, they build data centers and buy all the hardware that goes into them then Nvidia chips, the memory from Micron. They lease those data centers out to AI models like OpenAI and Anthropic. Now, this is a graph I showed it just a few weeks ago warning investors that this was coming. The entire AI stock bubble comes down to just these two companies OpenAI and Anthropic. That promise of revenue and more importantly the cash flow they generate from their consumers and business users that is what is holding all of this up and the trillions of dollars in loans, investments, and guarantees depends on that future revenue. And those loans, the investments, and the guarantees have created a spider web of dependency that should one thread break, it's going to take everything down with it. But then the market has been justified with that promise for years. Since OpenAI and Anthropic aren't public companies yet, they don't have to release those audited financial reports. They can show their own private investors highlights like revenue growth, but everything is really just a black box. But now with both of those companies soon to go public, investors are finally going to get a picture of the AI businesses whether that revenue growth and cash flow is really there or just really a pipe dream. And nation that could be when the AI bubble turns 2,000. Not immediately. Now, I'm not saying last week's sell-off is the beginning of a crash, but it is coming. More likely, it really starts getting bad 3 to 6 months after Anthropic's IPO. That's when we're going to start to see multiple quarterly earnings reports, and when we're going to see a trend in those reports. And that's when we could find out that AI isn't changing our lives fast enough for investors. [snorts] But then, just like Amazon, there will be stocks that are going to continue to benefit from that growth of AI, even as those picks and shovels plays die out. Stocks like the seven I'm going to highlight next, while they may get pulled down in a crash, will also rise quickly into the next bull market. I'll show you how I'm using this to find the stocks to buy next. But with gas prices getting ridiculous again, I want to thank today's sponsor Upside for another way to earn cash on everyday purchases. Upside is a free app that helps you earn extra cash back on gas, groceries, and dining. Gas hit $4.28 a gallon here in Tampa recently. That's more than $50 a tank every time I fill up. But then, here's how easy it is. 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If you've seen what this stuff can do, how it's revolutionizing it is, that is not a question. The question is, which companies are going to ultimately benefit from that change? Because there's a huge difference between the companies building AI infrastructure, the data centers, and and then those using it. And those hardware companies need hundreds of billions of dollars in spending every single year just to justify their stock price. They need a never-ending cycle of new chips, networking hardware, memory, and that spending that goes with it. But then the companies actually putting AI to work, automating businesses, building and deploying agents, those companies are going to win even as that AI buildout slows down. we have enough data centers and that hardware cycle crashes, these companies still have a role in changing our world. Now, understand though, just like with Amazon in 2000, these eventual winners will almost definitely get crushed when this bubble burst. Investors rush into the exits. They're not going to stop and carefully separate the winners from the losers. Everything AI is going to get sold off. That's why before highlighting the seven stocks I'm buying for this post-bubble world, I want to show you how I'm investing. And this means not rushing out to buy all these stocks all at once. I'm building a position slowly, adding a little bit now just to put them on my radar. Then I'll add a little more every month or two, but always holding some cash back for that big crash that could come as soon as next year. UiPath, ticker PATH, is up first, and you'll notice most of these haven't seen their stock price boom along with that AI buildout names like Micron or AMD. Shares are actually down here, 18% over the last year, but have had moments around earnings that spike higher. UiPath could be one of the biggest winners as AI moves from answering questions to actually doing work. The company built its business automating repetitive tasks like processing invoices, entering data, and managing customer accounts. Now it's moving into AI agents that can interpret information, make decisions, and complete complex workflows. And unlike the companies building that AI infrastructure, UiPath doesn't need to spend billions of dollars developing models or building those data centers. It can integrate AI from different providers, benefiting from as those models become cheaper and more capable. Now, like that price history, the revenue forecast for many of these stocks don't yet reflect the opportunity that we're talking about. Revenue is only expected up 11% this year and earnings to barely budge higher, but this one is on the cusp of that AI use in business and now is the time to buy before the revenue growth accelerates. And the most important piece to all of this though is the cash flow statement showing the actual cash generated and used by the company. This analysis here is going to be critical in these companies' survivability when that financing does dry up in the AI bubble crash that they can generate enough cash and they have enough cash on hand to push through the next years. Here we see UiPath is already positive on cash flows from operations generating over $370 million a year even after reinvesting in the business still producing over $360 million in free cash flow and and that's $619 million in balance sheet cash on hand. That means even if the cash flow does dry up, the company has years of runway to grow. And we won't see this in all the companies here, but this is one where I would make the decision for how much and how fast you invest putting most of your money in those with the stronger cash flow. And besides those cash flow risks, I don't want to underestimate the other risks. So, I'm going to highlight them in each stock we talk about. Here, AI could make UiPath's original automation technology obsolete. Microsoft, OpenAI, and other competitors could also offer similar capabilities directly making UiPath's additional software layer unnecessary. But even if that happens, I still think the market for this kind of process automation is still large enough for UiPath to grow, but it is a risk you need to watch in that quarterly revenue growth. I'm also going to show analyst targets for each of these stocks, but these forecasts aren't gospel by any means. Hell, half of the analysts I knew when I was an analyst couldn't forecast the weather if they were standing outside, but these can be a good start to see where Wall Street meets your own analysis. Of the 17 analysts here covering UiPath, the average target is for $15.57 per share or about 20% upside. Though, remember these are one-year targets and we're talking more about at least a three to five-year period where where these seven stocks take off as AI changes our world. ServiceNow, ticker NOW, could be one of the most misunderstood stocks on Wall Street with the shares crashing in that software sell-off last year. The stock has rebounded from that May low, but it's still down 21% for the 12-month period. Where I think Wall Street is wrong though is in ServiceNow's potential within the AI agent economy. Its software already connects departments and automates workflows across large businesses from IT support to customer service and human resources. Yes, AI agents are going to be able to do a lot of this work, but companies need someone to sit in between to make sure those AI costs don't swamp the budget. That's what ServiceNow does with its orchestration platform, routing a company's agents to the most efficient AI model. It's going to be a critical piece in the evolution of the AI business use. And ServiceNow's expected 22% revenue growth for this year doesn't look like a company suffering from any AI-driven software slowdown, and we could see that number take off as those enterprise customers really get into the AI agents and need ServiceNow's orchestration for it. That revenue growth and more importantly the earnings growth here combined with the stock's fall this year going to make this one even more attractive. And as a $145 billion giant, the company has no problem with cash flow or financing. It's generating over $5.3 billion in operating cash flow, and while it did spend more than it usually does on acquisitions and other CapEx over the last 12 months, it is still maintaining free cash flow over $4.5 billion and has $2.5 billion in balance sheet cash. I would like to see it borrow less, and I think it will slow down on that debt with interest rates rising, but no cash flow worries on this one. Now, that is not to say that there aren't risks though. Microsoft, Salesforce, and AI developers are here competing in the same agentic orchestration model. So, ServiceNow has to prove that it can do it a better job and keep its existing customers. And ServiceNow is one of the most widely covered stocks on our list with 32 analyst targets, though only at an average upside of 10% to $155 per share. I think Wall Street is still just too focused on that software side of the risks here and not paying attention to how the company uses that orchestration model to to drive growth. So, I think this one goes much higher. Palantir, ticker PLTR, has been a tough one for me because it's always been so expensive on those valuation multiples, but the growth supports the stock. Shares are only up 4% over the last year, but this one has become a key piece in that AI theme. Palantir could become one of the biggest winners from turning AI into real-world business decisions. It's artificial intelligence platform connects AI models with a company's proprietary data and operations. I think manufacturers optimizing their production, hospitals managing resources, or or defense agencies analyzing their intelligence. Palantir doesn't need to develop its own breakthrough AI model. It's the one of the best companies showing the businesses how to actually use the technology, and you see that opportunity already playing out in the growth with revenue expected up 83% this year, past 8 billion, another 50% growth next year. If we do see a market-wide crash in the AI story, that growth will slow, but it's still proof that this company is benefiting from the AI revolution. Like ServiceNow, there's no worry on cash flow here for Palantir with a company already generating $3.4 billion in operational cash flow and about that same in free cash flow. It's also tapping the debt markets quite a bit here to reinvest in the company, but with over $2 billion in cash on hand, even in a slowdown, Palantir is going to survive to come out the other side of an AI crash. But then, valuation has always been the biggest risk with Palantir because even a great company can be a lousy investment at the wrong price. Shares still trade for more than 163 times on a price-to-earnings basis and more than 80 times on price-to-sales. So, I'd like to see this one come down to around 160 or even $150 a share before jumping in too much. We do see a lot of bears on Wall Street for Palantir, and I'd agree on this one. And this one is just still a little too expensive for me to load up on, but it is getting closer. The average price target is for 13% higher to $212 per share. But look at that downside target, 57% lower to just $80 a share. That'd wipe out the entire two years of returns and it could get there in an AI bubble crash. So, be ready to pick this one up if it does. Cloudflare, ticker NET, has bucked the software sell-off that we've seen in other stocks because of its legacy cybersecurity business. It fell initially in that early year software scare, but cybersecurity stocks have jumped and even with the recent weakness, it's still up 38% over the last 12 months. And Cloudflare operates on that same upside that we saw with ServiceNow, a management layer between a company's AI agents and the AI models that they use to help the company manage their costs. Where Cloudflare wins here is that it also has those secure connections, the authentication and the protection built in for this activity. The company already operates a global network providing security and connectivity services and it's expanding its tools for developers building AI applications. And Cloudflare doesn't have to wait for that orchestration business to take off. It's already expecting to grow revenue by 32% this year and to boost profits by 35% to a $1.26 per share. Growth is expected to slow a little next year and with any kind of an AI crash, expect it's going to come down even more, but this is going to ramp right back up as the company manages that agent flow for its customers. Cloudflare doesn't have quite the cash flow strength that we saw with Palantir or ServiceNow, but this is a $100 billion company. So, it's also not in the kind of cash flow danger that we're going to see in the next three stocks. The company generated over $633 million in operating cash and has almost $1.7 billion in cash on hand, enough to see it as the industry falls apart and still survive. We see 27 analysts covering Cloudflare and a relatively good outlook for 21% upside to $358 per share to the average target. Though, there is still a bear looking for a big sell-off and a $160 low target. Now, SoundHound AI, ticker SOUN, is the first of the smaller companies that, while they have more upside potential, also have a lot more risk. Now, I first started recommending SoundHound early 2024 with the shares right around $4.80 and we rode it all the way up. I had my shares called away in January, selling for about $15 each, but then bought back more just under $9 a share in April. Down for this leg of the investment, a SoundHound could be one of the most direct beneficiaries of how consumers interact with artificial intelligence. Its voice AI technology allows businesses to automate conversations from restaurants ordering and customer service to automotive assistance, with the company estimating a $140 billion dollar market opportunity. AI agents could eventually schedule appointments, resolve billing problems, and complete purchases all without human assistance. And SoundHound already has the partnerships to move into new verticals. Now, it's not growth that's the problem here, with a revenue expected up 73% this year to almost $300 and another 32% increase next year. The company is building on that leadership in voice assistance, and given enough time could be the next Amazon that we're looking for. But here for investors, it is all about cash and the survivability. The company has never generated positive cash flow, and while it does have about $200 on balance sheet cash, it's dependent on that constant financing to pay the bills. Now, even in the worst-case scenario, I do think that the intellectual property that the voice assistant technology is valuable here. So, maybe a buyer steps in to buy the company if that financing dries up in an AI crash, but this one is one of the riskiest of the group, so be very cautious here. As is usual with these smaller companies, Wall Street analysts just don't want to take a chance with just five analysts covering the stock. Smaller companies don't do as much bond issue or M&A business with Wall Street, so analysts really don't have that incentive to talk up the stock in hopes that their bank's getting that business. But we do see some very strong targets here, with an $11 per share average target, more than double where the stock is right now. And what I'd like to see here, even that low target of $6 is still 26% upside. Tempest AI, ticker TEM, is down 27% over the last year, getting crushed as investors exit these smaller AI companies. Those shares are still up 15% since I recommended the stock in July 15th, pointing out that both President Trump and Nancy Pelosi are loading up. Tempus AI could be one of the most transformative applications for artificial intelligence. The company combines clinical records, genomic information, and AI to to help doctors make more informed treatment decisions. Imagine comparing a patient's genetic profile against enormous data sets to identify therapies or just predict treatment outcomes. Tempus is building the data and the technology to make that kind of personalized medicine possible. It's growing library of clinical and genomic information could become a competitive advantage that's difficult to replicate. And despite the stock weakness, we're still seeing the kind of growth that we want to see in these growth stocks. Tempus is expected to grow revenue by 25% this year, and while it's still unprofitable on that net income basis, it's forecast to narrow that earnings loss to just 5 cents a share by next year. But here in this cash flow statement, we see the same danger we saw with SoundHound. Tempus is burning through cash to the tune of $270 million a year. It does have just over 600 million in balance sheet cash to hold it over, but it is still going to be deeply dependent on financing for years. So, this is another survivability question mark. Now, besides those cash flow risks, health care regulation is a big one here, and it seems like it's always hit or miss with these tech-driven medical companies. Tempus has a great start on that growth, but a lot of hurdles still remain. We have a few more analysts covering Tempus, a 15 analysts with an average target of $73 per share or about 10% from here. Now, that disparity, the difference in the targets is big here, so you really do need to do your own analysis. How much do you think the stock is worth? But given enough time, I think it will do well as the AI develops. Snowflake, ticker SNOW, has managed to rally off the AI software earlier in the year and is now up 26% over the 12 months despite crashing 20% from the peak in last week's sell-off. Snowflake could benefit from one of the biggest obstacles to enterprise AI adoption, accessing that useful data. Businesses have decades of customer records, financial information, and operational data scattered across different systems. AI agents need to secure that access to the information to to make those decisions and complete tasks. Snowflake helps companies organize, analyze, and use their proprietary data. Well, its Cortex AI platform allows businesses to to build AI applications and agents directly on that information. As AI models become cheaper and more interchangeable, the real competitive advantage could come increasingly from this kind of proprietary business data that that makes those models more useful. This is one of my favorite growth stories already playing out with revenue expected up 35% this year. Well, earnings are expected lower as the company competes for that growth. Profits are expected right back up next year. And here, back into the hundred-billion-dollar companies, we again see some cash flow strength here with Snowflake generating over 1.2 billion dollars in operational cash flow and nearly as much as that in free cash flow. It's even started paying down its debt over the last several years and and still has 1.7 billion in cash on hand. So, like a few of these, no survivability worries on this one. Snowflake is another widely covered on Wall Street with 35 analysts here. And again, some confidence in the price targets versus that current price. An average target of $438 per share would be 41% upside. Well, well, even the lowest target of 360 each would be about a 16% higher from here. Now, if you're looking for more investing ideas and stocks to buy, YouTube has picked out this video here just for you. Check it out and see if it's right.