Selling returned to the stock market on Monday and continued through early afternoon trading on Tuesday. Wall Street dropped artificial intelligence and big tech stocks ahead of Nvidia’s earnings release on Wednesday.
The AI-driven pullback offers a chance for long-term investors to begin adding to their watchlists, looking for some best-in-class AI stocks to buy at discounts either now or down the road.
Investors looking to buy strong AI-boosted stocks might start with the diverse set of stocks we explore today—Taiwan Semiconductor Manufacturing and Vertiv.
The Bull Case Remains: Time to Start Buying On the Dip?
The stock market pullback, driven by all things AI from chip stocks and big tech to nuclear energy appears somewhat overdue and healthy following the massive rally off the stock market’s lows.
Despite the recent pullback, the Nasdaq is still up over 45% since early April and 17% in 2025.
Wall Street made it through the entire earnings season largely unscathed, as the Mag 7 stocks and the AI companies reaffirmed their strong outlooks and capex commitments.
Nvidia is the last piece of the AI earnings puzzle and by far the most important.
Therefore, the selling heading into its November 19 release makes sense as Wall Street wants to make sure it takes home profits ahead of the unknowns of the AI chip maker’s guidance.
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NVDA might have to wow investors to help the market rebound quickly.
But the overall earnings picture has improved since the Q3 earnings cycle started. More importantly, earnings growth is projected across every sector of the economy in 2026 and 2027, according to the most recent Zacks data.
On top of that, the Fed is still likely to cut interest rates again. This backdrop means that long-term investors should do their best to block out the noise and start thinking about buying beaten-down stocks.
The Nasdaq broke below its 50-day on Monday and tested its lows over the past several months on Tuesday morning.
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Some might want to wait until after Nvidia releases its earnings or a possible larger selloff to a level such as the 200-day before they consider buying stocks on the dip.
That said, market timing is difficult. It can leave even the biggest hedge funds and famed investors looking foolish.
Long-term investors could start dipping their toes in now since CNN’s Fear and Greed Index, used by Wall Street traders as a contrarian buy-and-sell gauge, already rests at Extreme Fear (11 out of 100)—it hit 3 out of 100 when the market bottomed in early April. If the market eventually falls further, confident investors looking years down the road might add to their positions.
Taiwan Semi is One of the Best AI Tech Stocks to Buy and Hold
Taiwan Semiconductor Manufacturing Co. TSM is the undisputed titan of advanced chip manufacturing. Nvidia NVDA, Apple, other Mag 7 companies, and beyond rely heavily on TSMC to physically build their most cutting-edge semiconductors for AI and everything else.
Taiwan Semi reportedly holds a 60% share of the entire foundry market and 90% of advanced chip manufacturing. The tech giant is boosting its industry-leading 3-nanometer production as the likes of Nvidia ramp up shipments to drive the AI arms race.
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TSMC spent decades perfecting chip manufacturing and eating away at a larger chunk of the market, with other companies slowly willing to give up their foundry capabilities and outsource to Taiwan Semi.
The costs and, more importantly, the internal expertise required to manufacture the most advanced semiconductors has created an almost impenetrable moat around TSMC.
Taiwan Semi is one of the most important companies in the world, which is why it’s addressing geopolitical fears by expanding its manufacturing footprint outside Taiwan into Japan and the U.S.
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The company posted another beat-and-raise quarter last month, confirming the AI boom is in full force. TSMC is projected to grow its revenue by 34% in FY25 and 21% in FY26 to surge from $90 billion in 2024 to $145 billion next year.
Taiwan Semi is projected to grow its adjusted earnings per share (EPS) by 45% in FY25 and 20% next year. Its FY26 EPS estimate climbed another 12% since its mid-October release to extend its impressive run of upward revisions.
On top of its earnings growth, its dividend payments are supported by its sturdy balance sheet. And 10 of the 13 brokerage recommendations Zacks has are “Strong Buys.”
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Taiwan Semi stock easily tripled the Zacks Tech sector over the past 20 years and soared 1,110% in the last 10 years to blow away Tech’s 400% (TSM crushed five of the Mag 7 stocks in the past 10 years, only lagging behind Nvidia and Tesla).
TSM stock, like the Nasdaq, fell below its 50-day, and it’s attempting to hold its ground at its recent lows. Any pullback to its 200-day or its early January highs would mark a screaming buy.
The stock currently trades around 11% below its peak and 18% under its average Zacks price target. Valuation-wise, Taiwan Semi trades at a 15% discount to Tech and 30% below its highs at 23.9X forward 12-month earnings.
Buy AI Infrastructure Stock Vertiv Now?
Vertiv Holdings Co VRT is an AI infrastructure and continuity solutions standout. VRT works directly with Nvidia to help solve critical behind-the-scenes challenges in the AI data center world such as cooling.
The company’s growing portfolio helps make sure the technologies that drive the economy are running as smoothly as possible 24/7.
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VRT confirmed its bullish outlook with strong Q3 results and AI-boosted guidance in late October. The company pointed to the “fast-growing, AI-driven market” and said that the “digital age is just beginning.”
Ultimately, Vertiv appears poised to benefit from the AI era, regardless of which tech companies eventually dominate the industry.
Vertiv is projected to grow its revenue by 28% in 2025 and 21% next year to reach $12.32 billion in FY26—more than doubling its sales from 2022 ($5.69 billion). The company is projected to grow its adjusted EPS by 44% and 26%, respectively, following 60% growth in 2024 and 236% expansion in 2023—growing from $0.53 in 2022 to $5.19 next year.
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The AI data center infrastructure stock’s earnings revisions have surged since its release, earning it a Zacks Rank #1 (Strong Buy). Vertiv’s post-Q3 positivity extends its run of soaring EPS estimates as it benefits from insatiable AI demand.
VRT stock skyrocketed 1,100% in the past three years to blow away Tech’s 140% and six of the Mag 7 tech stocks, while matching Nvidia. The stock climbed 45% in 2025, including its 16% drop from its late October highs.
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Vertiv is attempting to hold its ground at its 50-day moving average and its pre-DeepSeek selloff highs on Tuesday.
The stock has already cooled off from heavily overbought RSI levels. The pullback mixed with its strong earnings outlook has VRT trading at a 25% discount to its highs at 32.9X forward earnings.
Zacks Names #1 Semiconductor Stock
This under-the-radar company specializes in semiconductor products that titans like NVIDIA don’t build. It’s uniquely positioned to take advantage of the next growth stage of this market. And it’s just beginning to enter the spotlight, which is exactly where you want to be.
With strong earnings growth and an expanding customer base, it’s positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
Vertiv Holdings Co. (VRT) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).