Amid renewed tariff-induced volatility, among other factors, the Nasdaq-100 Index (NDX) slipped nearly 2.5% last week. That sparked fresh fears that current geopolitical and macroeconomic climates remain headwinds to growth stocks. Those headwinds may imply that investors aren’t flocking to AI stocks like Nvidia (NVDA) or ETFs like the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM). That sentiment may be temporarily accurate, but some analysts argue opportunity beckons with the AI trade.
Add to that, the first-quarter retrenchment experienced by AI stocks, including those residing in QQQ and QQQM, has made valuations on the previously richly valued group more enticing. Importantly, that’s true of a variety of high-quality AI stocks, including plenty of members of the QQQ/QQQM rosters.
QQQ Has Some of the Best AI Ideas
Morningstar analyst Tori Brovet recently examined the Morningstar Global Next Generation Artificial Intelligence Index for opportunities among AI equities. In discussing QQQ and QQQM, that index is pertinent. That's because there’s plenty of overlap between that gauge and NDX, the benchmark tracked by the Invesco ETFs.
It’s also important because the Morningstar index only features stocks rated four or five stars by the research firm and those trading at discounts to fair value of at least 20%. Plenty of QQQ/QQQM holdings check those boxes, including Microsoft (MSFT).
“Microsoft starts our list of the best AI stocks to buy now. The software and cloud provider has established a leading AI portfolio with offerings like OpenAI, which is home to ChatGPT. Last year, we raised our revenue growth estimates and profitability assumptions for Microsoft based on consistent performance and a solid outlook,” noted Brovet.
Another marquee QQQ/QQQM holding that now appears undervalued is Facebook parent Meta Platforms (META), the ETFs’ largest communication services component.
