I spent the last two days telling you about risk. AI data center debt quietly landing in your 401(k). Billions of dollars trapped behind gates at some of the biggest funds on Wall Street.
Today, let’s flip the coin. Because the same forces creating those risks are also creating some of the best buying opportunities I’ve seen in years.
Goldman Sachs just published a note calling this a “generational buying opportunity” in tech. Their chief global equity strategist, Peter Oppenheimer, laid out seven reasons the selloff went too far. Morningstar’s chief US market strategist, Dave Sekera, backed it up. He said tech is trading at one of its greatest discounts in 15 years. Only twice since 2010 has the sector been this cheap relative to the rest of the market.
The S&P 500 just closed above 7,000 for the first time in history. And this morning, one of the companies on my watchlist posted a 58% profit surge. The AI story isn’t slowing down. If anything, the numbers are getting bigger.
Here are four names I’m watching right now.
Microsoft (MSFT)
Microsoft is trading around $420. The average analyst price target sits near $589. That’s roughly 40% upside if the Street is right.
This is a $3.1 trillion company generating enormous cash flow. Azure cloud keeps growing at double digits. The OpenAI partnership gives Microsoft the strongest AI distribution advantage in the industry. And the stock is still down about 15% from its highs this year.
The company reports earnings on April 29. If the numbers come in the way most analysts expect, this price won’t last long.
Nvidia (NVDA)
Nvidia trades near $199. The consensus analyst target is roughly $275. That’s about 38% upside.
Every major AI system on the planet runs on Nvidia’s chips. When I wrote earlier this week about companies borrowing billions for data centers, those dollars are buying Nvidia’s GPUs. Revenue growth has been staggering. Each quarter seems to set a new record.
The stock pulled back hard this year as investors worried about whether AI spending could keep up. But this morning’s TSMC earnings told us something: the factories that make Nvidia’s chips just posted record numbers and raised their full-year outlook. Demand isn’t slowing.
At a P/E of about 40, Nvidia isn’t cheap in the traditional sense. But the earnings growth rate makes that multiple look reasonable for anyone thinking 3 to 5 years out.
Alphabet (GOOGL)
Google’s parent company trades around $337 with an analyst consensus target near $367. The upside is smaller than the other names on this list. So why include it?
Because Google Search generates roughly $615 million in revenue every single day. Let that number sink in. Per day.
The market spent the last year worrying that AI chatbots would kill search. That narrative pushed the stock down. But search revenue keeps growing quarter after quarter. Nobody has taken meaningful share. Meanwhile, Google Cloud is accelerating and YouTube is printing money.
Sometimes the best investments aren’t the ones with 50% upside on paper. They’re the ones where the downside risk is lowest and the business keeps compounding whether headlines are good or bad.
Taiwan Semiconductor (TSM)
This morning, TSMC reported first-quarter net income of $18.16 billion. That’s a 58% jump from a year ago. Record profit. Beat every analyst estimate. And the company raised its full-year revenue forecast and committed to even more capital spending.
If you own a smartphone, a laptop, or any device with a modern chip, there’s a good chance TSMC made it. They manufacture for Apple, Nvidia, AMD, and dozens of other companies. There is no AI buildout without TSMC.
At around $380 per share, this isn’t a bargain-bin stock. Morningstar actually thinks it’s trading above fair value right now. But the earnings growth is hard to argue with. Eight straight quarters of double-digit profit growth. If AI spending keeps accelerating and TSMC keeps executing like this, today’s price could look cheap in hindsight.
The risk is geopolitical. Taiwan sits in a complicated part of the world. TSMC is building plants in Arizona and Japan to diversify, but that takes years. If that risk makes you uncomfortable, that’s a perfectly valid reason to pass.
The Bottom Line
Two of these stocks are clearly discounted below where Wall Street thinks they should be. The other two are priced closer to full value but have earnings trajectories that could justify even higher prices.
I’m not telling you to buy all four tomorrow. Do your homework. Read the earnings reports. Understand what you’re buying and why.
But when Goldman Sachs and Morningstar are both saying tech hasn’t been this cheap in years, and the largest chipmaker on earth just posted a 58% profit jump, I think it’s worth paying attention.
— Tom
