Key Points

AI stocks have come under recent pressure amid concerns about spending.
However, most signs point to strong continued growth.
It is best to stick to AI leaders' stocks.
These 10 stocks could mint the next wave of millionaires ›

Artificial intelligence equities have propelled market advances over recent years, yet this summer those names have encountered some headwinds. Although talk of an AI bubble has emerged, the bulk of sector stocks carry sensible valuations, if not outright bargains, unlike the excessive multiples from the internet boom era.

The primary worry centers on a potential slowdown in AI infrastructure outlays. Hyperscalers continue to commit record sums to expand AI data centers, so even minor hints of reduced spending trigger stock sales.

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One recent case involves Meta Platforms (NASDAQ: META) indicating it might offer cloud computing services using spare capacity. Concerns arose that the firm already holds excess resources. Meta CEO Mark Zuckerberg reassured investors by highlighting robust computing demand, noting that supplying power to external parties can prove more profitable than internal uses.

Image source: Getty Images.

One of the strongest signals that the AI infrastructure expansion will persist comes from Taiwan Semiconductor Manufacturing (NYSE: TSM) CEO C.C. Wei. The foundry raised its 2026 capital expenditure forecast to a range of $52 billion to $56 billion to back AI chip growth, following extensive review that included input from customers and their clients. Idle fabrication plants can damage margins, so this move reflects careful confidence.

Meanwhile, Citigroup analysts forecast AI data center capital spending will rise another 40% to 50% next year, reaching roughly $1.5 trillion. Analyst Vivek Arya tied this outlook to rising AI agent use, token expansion, and ongoing supply limits.

Should you own AI stocks and ETFs?

A Motley Fool poll conducted before the year began showed 90% of respondents intended to hold or add to AI positions, while just 7% planned reductions. Many investors likely already hold AI names through broad funds such as the Vanguard S&P 500 ETF (NYSEMKT: VOO). Strong performance has made AI stocks prominent even in wide indexes.

The approach should treat these holdings as long-term positions focused on companies with strong fundamentals and fair prices. Several solid AI options meet those criteria.

For those preferring funds over single names, the Invesco QQQ Trust (NASDAQ: QQQ) offers broad exposure by tracking the Nasdaq-100 index. Technology names comprise nearly 70% of its assets, with top holdings dominated by firms driving AI progress.

Individual stock choices can center on market leaders. Nvidia (NASDAQ: NVDA) holds the top position in AI and carries an appealing valuation, while Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) stands out as a full-spectrum AI participant with proprietary chips and a leading model. Meta Platforms shares trade at low multiples and excel at integrating AI into core operations for growth. Advanced Micro Devices (NASDAQ: AMD) stands to benefit greatly from inference and agentic AI, and Broadcom (NASDAQ: AVGO) gains as hyperscalers seek its help with custom AI designs. TSMC also presents a strong case given its near-monopoly in AI chip production and resulting pricing strength. These names suit long-term AI portfolios.

Investors should still avoid concentration and maintain diversification, even with a tech tilt. An ETF such as the Vanguard S&P 500 ETF serves well as a core position for regular dollar-cost averaging to build wealth steadily.

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Citigroup is an advertising partner of Motley Fool Money. Geoffrey Seiler has positions in Advanced Micro Devices, Alphabet, Broadcom, Invesco QQQ Trust, Meta Platforms, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Broadcom, Meta Platforms, Nvidia, Taiwan Semiconductor Manufacturing, and Vanguard S&P 500 ETF. 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.