by Ian Cooper

Over the last few days, AI stocks plunged.

For one, valuations have gotten a bit frothy. Two, a recent report from MIT said that about 95% of company generative AI pilot programs resulted in “little to no measurable impact,” on revenue or profits, as highlighted by Fortune.com. Three, OpenAI CEO Sam Altman says AI is in a bubble, but he’s still ready to aggressively spend on Ai infrastructure.

But AI isn’t going away.  It’s just taking a breather.

In fact, according to Wedbush analyst Dan Ives, the party is far from over.

“Ives said that, although some names in the AI sphere — such as OpenAI CEO Sam Altman — have warned of overexuberance from investors about the technology, in his view, ‘the AI party … started at 9pm. It’s now 10pm. That party goes to 4am,’” as quoted by CNBC.

With that, Ives still believes tech heavyweights, such as Microsoft, Amazon, Google, Nvidia, Tesla, and Meta will be some of the top standout winners.

And we have to consider that some of the biggest companies in the world are spending more.

Alphabet just announced it will boost its capital-expenditure forecast for the year to $85 billion from $75 billion. Even better, Meta, Amazon, Alphabet, and Microsoft intend to spend about $320 billion on AI technologies and data centers this year, as compared to the $230 billion capex in 2024. Plus, as noted by UBS, AI capex is expected to explode even higher, potentially reaching hundreds of billions of dollars a year.

So, what’s the best way to trade the AI pullback?

Here are three ways.

Advanced Micro Devices (AMD)

AMD continues to be a standout stock for the AI boom.

Since April, AMD ran from a low of about $80 to a recent high of $186.65.

Now back to $163.71, it’s still challenging Nvidia for chip dominance. Helping, the company is exposed to a multi-billion-dollar addressable market for data center AI chips. In fact, according to company Chair and CEO Lisa Su, that addressable market for AI chips will reach $500 billion by 2028, which is up from her prior estimate for $400 billion by the time 2027 rolls around.

Plus, the company’s latest generation of AI chips, the MI300, is its fastest ramping product ever. Lisa Su added that AMD’s MI300X chip – which rivals dominant AI chipmaker Nvidia’s H100 is “the most advanced AI accelerator in the industry,” as noted by Time.com.

Palantir Technologies (PLTR)

After running from about $790 to $190, Palantir Technologies pulled back to its 50-day moving average ($156.18), where it appears to have found support. From here, we’d like to see the tech giant initially retest $190, and perhaps $200 later this year.

Analysts like it, too.

Morgan Stanley, for example, raised its price target to $155 from $98, noting that, “the third quarter revenue guidance targets +50% year-over-year growth while 2025 revenue growth guidance raised by 9 points to +45% from +36% prior, with operating margin of 46% are best-in-class and underscores status as one of the clear AI winners,” as quoted by Seeking Alpha.

Piper Sandler, which has an Overweight rating on Palantir, raised the price target on the stock to $182 from $170. Analysts say PLTR’s 10-year $10 billion Army deal only strengthens the case for further government share gains within the large $1T+ Defense Total Addressable Market, as also highlighted by Seeking Alpha.

Global X Artificial Intelligence & Technology ETF (AIQ)

Or, if you want to diversify at a lower cost, there are ETFs like the AIQ ETF.

With an expense ratio of 0.68%, the ETF invests in companies that potentially stand to benefit from the further development and utilization of artificial intelligence (AI) technology.

Some of its top holdings include Palantir, Oracle, Broadcom, Netflix, Nvidia, Microsoft and Meta Platforms to name a few of its 86 total holdings. Since bottoming out in April at around $31, the AIQ ETF is now up to $43.88. From here, we’d like to see the AIQ ETF closer to $60.