2 Hypergrowth AI Stocks to Buy in the Current Sell-Off

Key Points
Morgan Stanley's research indicates the AI adoption curve is still in the early innings.
Organizations are spending big on Palantir's AI platforms, and the business is printing cash.
Taiwan Semiconductor's dominance in advanced chipmaking gives it pricing power, demand visibility, and a strong growth outlook.
- 10 stocks we like better than Palantir Technologies ›
Year to date, a sell-off in tech stocks has weighed on the S&P 500, which is currently down about 4%. Even so, the artificial intelligence (AI)-driven bull market may still have room to run. Morgan Stanley expects global AI spending to approach $3 trillion by 2028, with more than 80% of that spending still ahead.
That backdrop helps explain why leading tech companies continue to see robust demand that lines up with those forecasts. Here are two high-powered AI stocks worth considering on the dip.
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1. Palantir Technologies
Shares of Palantir Technologies (NASDAQ: PLTR) are currently down 28% from their recent high. Yet the company is seeing accelerating demand for its Artificial Intelligence Platform (AIP). It helps businesses and government agencies connect data, decisions, and operations in real time, making the most advanced AI models usable in day-to-day execution.
That differentiation is translating into high-value, long-term contracts and strong financial results. Last year, revenue grew by 56% to more than $4.4 billion. In the fourth quarter, growth accelerated to 70% year over year, driven by a 137% jump in U.S. commercial revenue.
Palantir's moat comes from helping large enterprises turn AI models into cost savings and measurable profits. That work deeply embeds its software in day-to-day operations, which raises switching costs and strengthens customer stickiness. This value supports lucrative customer contracts, allowing Palantir to convert roughly half of its revenue into free cash flow.
Palantir stock is richly valued, trading at high multiples of sales and profits. But if revenue growth and margins remain strong, that premium could be justified given the size of the opportunity ahead. The consensus analyst estimate calls for revenue to more than triple to nearly $15 billion by 2028.
2. Taiwan Semiconductor Manufacturing (TSMC)
The Motley Fool's research shows Taiwan Semiconductor Manufacturing (NYSE: TSM) is one of the most valuable companies in the world, and for good reason. It is in a lucrative position, manufacturing leading-edge chips for Apple and many top semiconductor designers. The surge in demand for chips across consumer devices and data centers has helped it deliver market-beating returns for decades.
TSMC's dominant share in advanced manufacturing means customers are often willing to pay a premium for its scale, reliability, and technical expertise. Last quarter, revenue reached $34 billion, up 25% year over year. Its 54% operating margin underscores the pricing power that comes with being irreplaceable at the cutting edge.
Many of its biggest customers are also leading cloud service providers. These customers have signaled that securing enough chips is a key bottleneck in their AI infrastructure plans, providing TSMC with good visibility into future demand. Management expects 25% annualized revenue growth through 2029, with AI-related chip revenue growing more than 50% per year.
The stock has slipped 13% from its recent highs. But with elite positioning, clear growth drivers, and a reasonable valuation at about 24 times this year's earnings estimate, TSMC offers investors a compelling way to participate in the AI boom.
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John Ballard has positions in Palantir Technologies. The Motley Fool has positions in and recommends Apple, Palantir Technologies, and Taiwan Semiconductor Manufacturing and is short shares of Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.