The AI Sell Off is HERE 3 Stocks to BUY the DIP on

AI stocks sold off this past week in some cases pretty hard as some of the biggest names in AI have come under significant pressure as investors are beginning to question whether the AI trade has simply gotten ahead of itself. And on top of that, we got a few economic reports on the topic of inflation that piled on to those selling pressures. Often when inflation is high, we see upward pressure on the Treasury yields, but instead we saw investors move into treasuries and actually pushing the 10-year Treasury yield lower. And that tells us something very important. Investors aren't just worried about inflation anymore. They're also starting to get more worried about economic growth and valuations and risk. Meanwhile, the Federal Reserve has another major decision upcoming. Does it continue holding rates where they're at, or does it increase him again? Could another rate hike be necessary? But while investors are selling AI stocks on near-term fears, I'm looking to take advantage of the dip on a few stocks, in particular, three that we'll talk about today. One is helping solve the power and cooling challenges created by AI. Another remains at the center of AI computing revolution and the third is benefiting from the growing demand for custom AI chips and high-speed networking. So in today's edition of the investors weekly playbook, I will be discussing three AI stocks that I'm looking to buy and already buying. So before we jump in, do me a huge favor and smash that like button down below. Comment one stock that you are looking to buy the dip on this particular week. And let me thank today's video sponsor which is FastGraphs. Fastgraphs is a tool that I have been using in my research for over a decade. As long-term investors, it's important to understand you are investing in the business. And with Fast Graph's analyzer tool, you can focus on the business behind the stock first before valuation. Let's start by taking a quick look at the Fast Graphs dashboard, which allows you to look up any stock. And on the screen, you can see that the black line represents the actual stock price, but the blue line actually represents the company's historical PE based on the period of time that you are viewing. But given that the stock is below its historical average with the use of fast graphs, I can see the potential gain. Just if we wanted to see the stock rise back to that historical average, what would be the upside potential? But that's not all because now we can move over to the forecasting tab. And if we're looking at a stock that we believe could see multiple expansion away from its historical average, this will help guide us as investors to see where this stock could be valued over the course of the next year or so. And Fast Graphs also has an AI assistant that can do some fantastic things like break down your portfolio by sector, top movers, and dividend projections, just to name a few things that I personally value. And you can try Fast Grabs for yourself along with many other features for just $5 for 3 months when you use the link down below with code mark 26 at checkout. Five bucks, you won't find a better deal to try this great analyzing tool. All right. Now, with that being said, let's jump into this week's video by looking at some of the big economic news we got this week because that could determine whether this sell-off becomes a much bigger correction or creates an attractive long-term buying opportunity. Let's start with the market action this week. And the first thing that I want investors to understand is that not every part of the market experienced the same level of selling pressures. Some of the biggest declines were concentrated in AI, semiconductor companies, and other growth oriented areas of the market. And that distinction is important because it suggests that investors are becoming much more selective. Taking a look here, you can see the sector performance for the past month. With the S&P 500, it was up less than 1%. But when you see the breakdown, there were actually six sectors outpacing the index. And what's on top is very interesting. Consumer staples led the market in the past month. Healthcare and energy. All of those scream defensive. Investors, at least over the course of the past month, have rotated to more defensive sectors. So, some of this selloff should not have come as a big surprise. For the past several years, the AI investment theme has been one of the biggest drivers of stock market performance. Companies have been spending enormous amounts of money building data centers, purchasing advanced semiconductors, developing AI models, and expanding their computing infrastructure. And many businesses benefiting from that spending have experienced tremendous growth. But now investors are asking a different question. It's no longer simply how much money is being invested in AI. The question is now becoming how much money will companies actually earn from their investments. Investors are looking to ROI. And I believe that's an important shift because while the AI revolution may continue for another decade or longer, that doesn't mean every company involved will generate attractive returns for shareholders. Some companies will generate extraordinary profits. Others could struggle with rising expenses, increasing competition, and significant debt, and some may never produce the returns investors are expecting. Now, I don't believe that means the AI trade is finished, but it does mean investors need to become more selective. of themselves and this week's economic data only added to those concerns. One of the biggest developments this week was the release of new inflation data and unfortunately the latest reports reinforce the concern that inflation remains elevated and changing direction in the wrong way. We received both consumer inflation and producer inflation data and both are important for different reasons. Let's begin first with consumer price index or CPI. The CPI measures changes in prices paid for a basket of goods. And when inflation remains elevated, it puts pressure on household budgets. Consumers have less purchasing power. Businesses can experience higher costs. So, here's a look at the latest CPI. With the headline CPI, it rose to 3.7% on an annual basis, rising 6% on the month. Core CPI, though, it was at 2.6%. Which is the more important reading for me. Both readings were ticks higher from the prior month. Reversing course though higher after falling for much of the past several years. One of the important contributors to the inflation recently to no surprise has been energy. We've discussed the impact of elevated oil prices, geopolitical tensions, and the potential consequences for the broader economy. And higher energy prices don't just affect what consumers are paying at the pump. They can affect transportation manufacturing shipping ultimately the cost of many goods or services. pretty much anything that needs to be shipped in some shape or form, they've seen costs increase. But there's also another important part of the inflation story we got this week, producer prices. And the producer price index or PPI measures changes in prices received by domestic producers. And when businesses are experiencing higher input costs, that can create pressures throughout the economy. Companies generally they only have three options. Number one is they can absorb those costs which reduces their profit margins. They can pass those costs along to consumers through higher prices or they can attempt to improve efficiency to help offset those increases. Now, not every increase in producer prices gets passed directly on to the consumer, but a good portion of them do. So, PPI can be viewed as a read through to future CPI readings. And taking a look here, we can see that wholesale prices, well, they jumped 6.3% annually in September. And that was actually the biggest gain that we have seen since 2022. Energy costs again a big driver for those. And when we look at it from a monthly basis, PPI, they increased 1.3% during the month of September. Again, these readings were well above economist expectations. Not just by a tick, but analysts or economists, they were looking for annual readings of about 5.5%. We got 6.3%. This was not a great report by any means. And here's why all of this matters for investors. The Federal Reserve has long-term inflation target of around 2%. Which is measured by their preferred gauge of PCE or personal consumption expenditure. And we're not going to get that reading until the end of the month on October 29th. So when inflation remains above that target, the Fed has to be careful about reducing interest rates too quickly because cutting rates could stimulate borrowing and spending at a time when inflation is already well elevated. And that's the problem for the stock market right now, especially growth stocks, because higher rates can affect both businesses financing costs and the valuation that investors are willing to pay for future earnings. But here's where things get particularly interesting this week. Despite the inflation concerns, the 10-year Treasury yield, it actually moved lower. And I want to explain why. Normally, when inflation comes in hotter than expected, investors anticipate that interest rates may remain elevated for longer. And that can push Treasury yields higher, again, pressuring stocks in general, especially growth stocks and higher yield dividend stocks. But right now, investors have choices. they can go get 5% risk-free return or close to 8% if they want to take on a little risk with bonds. But this week, we saw a different reaction. Investors moved a lot of money into Treasury bonds. And as demand for those bonds increased, treasury yields, they declined. The 10-year reached a high of 5.3%. And after this week, it dipped to 5.08%. And this is something I want investors to pay attention to because falling Treasury yields aren't automatically bullish for stocks. Sometimes yields decline because inflation is cooling and investors expect the Federal Reserve to lower interest rates. That can be a positive development for equities. But other times yields decline because investors are becoming increasingly concerned about economic growth and potential market risk. In that environment, investors may sell riskier assets like growth stocks and move capital into government bonds, and that could be the warning sign. Now, I wouldn't automatically conclude that every decline in Treasury yields represents a flight to safety. But when we see significant selling pressures in high growth stocks at the same time Treasury yields are declining, it's worth asking whether investors are becoming more defensive. And here's another reason this matters. The 10-year Treasury yield serves as an important benchmark throughout the economy. It influences borrowing costs, including mortgage rates and various forms of corporate financing, and it also plays a role in stock valuations. When treasury yields rise, investors can earn more from relatively lowrisisk government securities that can make expensive growth stocks less attractive. And when yields fall, it can provide some relief to valuations. But again, the reason yields decline is what really matters. If yields are falling because the economy is weakening, that could eventually affect corporate earnings. So, I don't want investors to look at a lower 10-year yield and automatically assume the stock market is about to rally. We need to look at the entire picture. And that brings us to the Federal Reserve. What will the Fed do next? The next Fed meeting is scheduled to take place on October 27th and 28th. And I believe this could be one of the more important meetings for the remainder of the year because the Fed is facing a difficult balancing act. On one hand, inflation remains elevated as we just saw. On the other hand, investors are increasingly concerned about economic growth, the financial market conditions, and shaky jobs market. So, just because stocks are selling off doesn't mean the Fed is automatically going to lower interest rates. In fact, the latest inflation data make that decision more complicated. I see three potential scenarios for the Fed. Scenario number one, the Fed holds rates steady for the month of October, which I believe this is the route they're leaning towards. This would allow policy makers to gather additional information about inflation and economic growth and give conflicting signals that we might be seeing. Maintaining the current policy stance could provide the Fed with more flexibility. Scenario number two is the Fed just goes ahead and increases rates again. Now, if inflation continues accelerating, policymakers could determine that additional tightening is necessary and that would likely create another challenge for highly valued growth stocks. And scenario number three, the Federal Reserve signals a more dovish outlook. If employment or economic growth weakens significantly, the Fed could become more concerned about downside risk. But here's the problem. If inflation remains elevated, at the same time that economic growth or the jobs market starts to break down puts the Fed in a difficult situation. They can't simply stimulate the economy without considering the potential inflationary consequences. And this is why I'm paying such close attention to the next several economic reports and the pending earning season we're about to venture out onto. I want to know whether inflation is beginning to moderate. I want to see whether the labor market is holding up. And I want to continue monitoring the direction of Treasury yields and which direction they're moving because all of those factors could influence the direction of the stock market. Now, here's how all of this connects to AI. If interest rates remain elevated for an extended period, companies relying heavily on debt to finance their expansion could face additional pressures. Look at a company like Cororeweave. They absolutely got rocked this past week. Looking here at my stock investors edge website, we can see the company has a financial health score of just 19, a very poor score. Down below, you can see they have a net debt to IBIDA of 11.5, which is terrible. And I continue to say, and you will continue to hear me say it, focus on quality. And if you don't know what that means, you should probably be taking my investing accelerator investing course showing my 12 steps to successful investing. There's a link for that down in the description below. It's a full self-paced program with videos that you can take at your own leisure. But when it comes to AI, not every company in the AI ecosystem has the same financial profile. Some are generating substantial profits and free cash flow today. Others are making enormous investments in anticipation of future demand. And that's why I want to focus on three companies that I believe are positioned to benefit from the long-term growth of AI. Starting with a company that's solving one of the biggest physical challenges facing the industry. And stock number one is going to be Verdiff, stock ticker VRT. And this is a company that I believe has one of the more interesting positions in the AI infrastructure market. Because when most investors think about AI, they immediately think about chips. They think about the enormous amounts of computing power required to train and operate AI models. But there's another part of the equation. In fact, there are several parts of the equation. What good is a data center filled with powerful AI chips if you can't provide enough electricity or keep those chips cool? And that's where Verdive comes in. Taking a look here at this Fast Graphs chart, you can see that the company is up 26% in 2026. But here's where Fast Graphs really helps because as you can see to the right, the normal PE for this company on average over the history of the period that you're looking at is around 31 times. The stock is currently trading slightly above that at 33 times. But if the earnings continue to grow and the stock continues to justify that multiple, again, we're not even talking about multiple expansion by any means. This would be a stock that would grow nearly 40% from the current levels. I don't know about you, but I like those returns. And here's another look at the forecasting tab on FastGraphs. Let's say the stock only warrants, say, a 29 1.5 times multiple. We are still talking about a stock with more than 30% upside from current levels based on the earnings growth that's coming forward. Again, Fast Graphs can be very useful in determining proper valuation and play with various multiples to see potential upside. Again, you can get all of it for 3 months and five bucks using that link in the pin comment down below and using code mark 26. All right, so some of you might be asking, well, what does Verive do exactly? Let me explain. Verdiff provides critical infrastructure used in data centers. That includes power management, thermal management, liquid cooling, and other services required to operate all of these facilities. And as AI computing systems become more powerful, these requirements are becoming increasingly important. Traditional data centers weren't necessarily designed to handle the power density of modern AI computing systems. If you have ever been inside one of these data centers, which I would venture to guess many of you have not, there are thousands of GPUs working overtime and requiring huge amounts of power. So with all of that power, these things can get hot and that heat needs to be managed. Cooling systems is just one of the items Verive offers. Otherwise, the equipment can't operate efficiently or reliably. So companies building AI data centers need more than just advanced semiconductors. They need the infrastructure to support them. And I believe that's one of the biggest opportunities for Verdiff. Now let's head back to my investors edge website which is available to all subscribers of my private community. And you could see a very different picture than what we saw with the likes of Cororeweave. Verdiff has a financial health score of nearly 80 a net debt of just 0.2 which is very strong and a quick ratio above one. It's okay for companies to have debt but the question is do they have the cash and more importantly the cash flow to help address that debt? And when we look at Verdiff, the answer is yes. Turning our attention now to earnings, and you could see that the company is expected to grow its earnings by 36% next year and 27% the following year. Yet, it trades at a multiple in the low30s, meaning this is a stock with a PEG ratio below one. The price you are paying compared to the earnings growth you're expected to get is quite enticing. But here's the part of the investment thesis I find most compelling. Verdive doesn't have to predict which AI chipmaker ultimately wins. Whether it's companies that are deploying Nvidia GPUs, AMD accelerators, or custom AI chips, those systems all require power and cooling. And as computing demands continue to increase, the infrastructure requirements could become even more significant. Now, that doesn't mean Verdive is immune to an AI slowdown. If major technology companies reduce capex or delay data center projects, that could affect Verta's future growth. So that's why it's important to look at various valuation factors and ensure you have some bakedin wiggle room from an earning standpoint so that you can face a potential slowdown. And for Verdive, I think that's the answer. But here's my approach. I believe Verdive has an attractive long-term opportunity. And if the stock continues pulling back while the underlying business remains strong, I want those types of companies in my portfolio. I'm not suggesting we know where the bottom is, and I certainly wouldn't put all of my eggs in one basket. But for investors looking to benefit from the continued expansion of AI infrastructure, looking for a highquality AI company, I believe Vertive deserves serious consideration because again, the AI revolution isn't just about chips. It's also about the infrastructure required to operate those trips. And that brings us to stock number two, which is going to be Nvidia. And I know this is not some crazy pickmark, but when I put out videos discussing this particular name, after pullbacks at intriguing valuations, people make money. And over the course of just the past few weeks alone, shares of Nvidia have pulled back 10% off their recent highs. Their revenues did not fall 10%, their earnings did not fall 10%. In fact, the business continues to execute, continues to grow at a fast pace, and that is when opportunities approach. And I know some will say, well, hasn't this stock already seen huge growth? And the answer to that will be yes. But you can't judge a stock or a company purely on past performance. Especially if a company like Nvidia that is in in the face of insanely high growth figures the past few years, it continues to report insanely high numbers. Now, one of the biggest misconceptions about Nvidia is the fact that it's simply a GPU company. And that's no longer an accurate way to describe the business. Nvidia has developed an entire AI ecosystem, an entire AI computing platform that includes advanced accelerators, networking technology, software systems, and developer tools. And one of the biggest competitive advantages is their CUDA software ecosystem. That ecosystem makes it easier for developers and businesses to build applications around Nvidia's technology. And once companies have invested and installed this significant resources developing their infrastructure around that particular platform, the switching can be extremely difficult and complicated. Now, that doesn't mean Nvidia has no competition. AMD, as you know, is a stock I absolutely love, and they continue to improve their AI accelerator, and I'll let you in on a little secret. I recently added to my position there. But major cloud providers, they're investing in custom chips, and companies like Broadcom are benefiting from that shift as well. But I believe Nvidia can remain a major player even as the AI computing market becomes more competitive. And here's one of the biggest reasons I continue to view Nvidia differently from some of the more speculative AI investments. Many companies out there, well, they're promising AI returns in the future. Nvidia, on the other hand, is generating substantial profits, substantial revenues from AI today. Isn't simply promising investors that it might eventually become profitable. The demand for its technology has already translated into significant revenue and earnings. Heck, Elon Musk came out and said that when it comes to SpaceX, they exclusively buy Nvidia chips and will continue to do so. But here's where I want to be careful. I don't believe Nvidia is immune to the concerns surrounding AI infrastructure spending. I don't want that to be the takeaway. Some of the companies purchasing AI computing equipment are investing enormous amounts of capital, and investors are increasingly questioning the return on those investments. If customers begin slowing their spending, that could eventually impact Nvidia's products. There's also the issue of competition. Custom AI chips, as I mentioned, they're having a growing share of certain workloads, and that could impact economics of a broader accelerator market. But I will tell you that what is not a concern is Nvidia's valuation. Looking here at Fast Graphs, you can see that Nvidia shares trade at 13 and a half times next year's earnings, which is just crazy cheap to me. Let's say they deserve a multiple of at least 20 times. that would incite shares of Nvidia could reach $315 per share and I believe they could reach that by the end of the first quarter of next year. Now, I'm not saying Nvidia has reached its bottom, but I do believe Nvidia remains one of the highest quality businesses in the AI ecosystem. And if the market continues creating opportunities to accumulate shares at more attractive valuations, it's a company I want to keep adding in my portfolio because the long-term demand for AI computing could remain significant. Even if the stock market experiences considerable volatility along the way for a number of AI stocks, but again, we talk about quality. This is one of the highest quality companies you will find. They have a financial health score of 84 backed by very little debt and strong cash flows. Now, there's one more company I want to discuss, and again, not a new company, but rather one already in my portfolio and one I just recently added more to. And if you are interested in following my portfolio, getting those trade alerts, option plays, and more, you can join my private investing community. There's a link down in the description below. But with this next company, similar to Nvidia in some shape or form, but benefits from a different part of the AI computing market, one that's becoming increasingly important as major technology companies develop their own custom chips. Stock number three is going to be Broadcom, stock ticker AVGO. And this is one of my favorite businesses positioned to benefit from the next phase of AI because I believe AI computing market is going to become increasingly specialized as some of the world's largest technology companies are investing heavily in custom chips. designed for their own workloads. And there's a very good reason for that. When you're spending billions of dollars on computing infrastructure, even relatively small improvements in efficiency can translate into enormous financial benefits. And that's where Broadcom comes in. Broadcom really has two major opportunities within the AI ecosystem. The first we know is AI accelerators. The second is high-speed networking. Let's start with custom chips. Rather than relying entirely on generalpurpose processors, certain companies are designing specialized semiconductors for specific applications. And Broadcom helps develop custom silicon for major customers. Now, this doesn't necessarily mean these customers are going to stop buying Nvidia GPUs. I believe the market is large enough to support multiple computing architectures, but custom chips could become an increasingly important part of the overall AI infrastructure market, and Broadcom is positioned to benefit. The second opportunity is networking because as companies build larger AI computing clusters, they need to move enormous amounts of data and they need to do it fast and that requires advanced networking technology. Broadcom provides products that help connect these systems. Again, this is not a business telling you about revenues and earnings that will eventually be coming down the pipeline. They are already generating billions today. They have orders to continue doing that at double the pace the next few years. And that growth has been accompanied by significant free cash flow generation. Now, free cash flow is something I want investors to pay very close attention to always, but specifically right now when analyzing stocks because in this environment where borrowing costs remain elevated, the ability to generate cash internally becomes increasingly valuable. Companies generating substantial free cash flow have more flexibility. They can invest in their business. They can reduce debt. They can return capital to shareholders. and they may be less dependent on external financing that companies are continually burning cash. Now, Broadcom does carry meaningful debt and that's something we need to monitor moving forward, but the company's cash generation is an important part of my investment thesis. Over the past year, shares of Broadcom are down around 5%. The business, meanwhile, just reported revenue growth of 86% in the past year. AI semiconductor revenue growing 220% record free cash flow. Yet the valuation you are paying is cheaper today than what it was a year ago. The stock going one direction which is nowhere and the financials continuing to climb. Sometimes it's difficult to break away from the market reaction. But when you truly analyze a business for what they are, you can find great opportunities in the midst of fear. Right now shares of Broadcom trade at a 20x multiple. That's on a trailing 12 months viewpoint. If the company remained at that multiple, shares would increase more than 60% next year. On a forward-looking basis, though, you can buy shares for 17 times that are expected to grow roughly 60% in the next fiscal year. That is great value you're getting with plenty of buffer. In fact, I liked it so much I just added to my position as you can see from this trade alert that went out to my community at the end of last week. This is a name I like for the long haul, and of course, it will have its ups and downs from a stock standpoint. the business continues to grow. But what I often tell investors or students that go through my course and right now especially, I know I am buying a highquality business at a great valuation. Control what you can control. But now let's take a step back. We just discussed three companies, three AI companies, Verd, Nvidia, and Broadcom. And while all three are benefiting from the growth of AI, they're well positioned in different parts of the infrastructure ecosystem. Verdive provides critical power and cooling infrastructure. NVIDIA provides advanced AI computing platforms and Broadcom provides custom AI chips and networking technology. But here's something I want to emphasize. Owning all three doesn't necessarily mean you're diversified because all three companies have significant exposure to the same underlying AI infrastructure investment cycle. And if AI capex continues growing, these businesses, they're going to do fine. They're going to benefit. But if spending slows materially, that's the key word, all three could experience some pressures. And that's why position sizing matters. So, it's important. I don't believe investors should put all of their available capital into AI stocks simply because the market has experienced a difficult week. And I certainly don't believe every stock that's down 10, 15, 20% is automatically a bargain. Instead, I want to focus on four key things. First, does the company have real demand for its products and services? Second, is it generating strong earnings and free cash flow? Third, does it have a strong balance sheet? How what is the quality of the company? And fourth, is the valuation attractive relative to its future earnings potential? Because remember, the goal isn't simply to buy a stock because it's fallen from its highs. The goal is to buy great businesses at great prices. And that's how I'm approaching the current sell-off. I'm not trying to predict the exact bottom. I'm looking for opportunities in highquality businesses while maintaining enough flexibility to take advantage of additional volatility. So where does that leave us? AI stocks have come under pressure. Inflation remains elevated. The Fed faces a difficult decision. And investors are becoming increasingly concerned about enormous amounts of money being spent on AI. But here's my view. A sell-off in AI stocks doesn't automatically mean the AI investment thesis is broken. And a strong AI investment thesis doesn't automatically mean every AI stock is worth buying today. Both things can be true. I'm going to continue to watch inflation. I'm going to continue to pay attention to the 10-year Treasury yield, and I'm going to closely follow the Federal Reserve's next decision, but I'm also going to continue studying the businesses that are actually benefiting from the AI investment. And right now, three companies I'm particularly interested in, Verd, Invidian, and Broadcom. Now, I want to hear from you. Are you buying AI stocks in the midst of this sell-off? Because Warren Buffett said it best. We want to be fearful when others are greedy, but we want to be greedy when others are fearful. So, if you could only own one of these companies for the next 5 years or so, which would it be? Verdive, Nvidia, or Broadcom, let me know down in the comments below. And while you're down there, do not forget to take advantage of the $5 Fast Graph deal when you use code mark26. Again, check out that pin comment below. And if you enjoyed this week's Investor Weekly Playbook, make sure you smash that like button down below, subscribe to the channel, and I'll see you in the next one. Take care. >> [music]