AI Is on Sale: 2 Stocks Worth Buying Before the Next Surge

Group 1: AI Market Overview - Artificial intelligence (AI) is expected to significantly impact the global economy, potentially contributing 3.5% or nearly $20 trillion to global GDP by the end of the decade [1] - Investors have heavily invested in AI stocks over the past three years, leading to high valuations for many companies in the sector [2] Group 2: Meta Platforms - Meta Platforms is leveraging AI to enhance its digital advertising capabilities, resulting in a 5% increase in ad conversions on Instagram and a 3% increase on Facebook [5] - User engagement has improved, with time spent on Facebook and Instagram increasing by 5% and 6% respectively, contributing to a 22% rise in Q2 revenue to $47.5 billion [6] - Meta's adjusted earnings per share grew by 38% year-over-year to $7.14, exceeding Wall Street expectations [7] - The average price per ad served increased by 9% year-over-year, and ad impressions rose by 11% due to AI-driven user engagement [7] - Nearly 2 million advertisers are utilizing Meta's generative AI tools, which have shown a 22% improvement in return on ad spend [9] - Meta is currently trading at an attractive valuation of 27 times earnings, lower than the Nasdaq-100 index's multiple of almost 33 [10] Group 3: Lam Research - Lam Research plays a crucial role in the AI revolution by providing semiconductor manufacturing equipment necessary for AI model training and deployment [11][12] - Increased capital expenditure budgets from semiconductor companies are expected, with SEMI projecting a 6.2% increase in wafer fabrication equipment (WFE) spending in 2025 and a 10.2% increase in 2026 [13] - Lam Research reported a 23% year-over-year increase in annual revenue to $18.4 billion and a 43% increase in diluted earnings per share to $4.15 [14] - The company anticipates $5.2 billion in revenue for the current quarter, surpassing the consensus estimate of $4.63 billion, indicating a 25% year-over-year increase [15] - Analysts expect Lam to achieve double-digit earnings growth rates, supported by a projected 24% annual growth in the AI chip market over the next five years [16] - Lam is trading at 23 times trailing earnings, presenting a favorable investment opportunity given its potential for AI-driven growth [17]