Unlocking the AI Advantage: 3 Stocks to Consider Amid the September Sell-Off

As the market navigates the historically challenging month of September, savvy investors are keeping a keen eye on the potential opportunities that may arise. While the broader market may experience volatility, the growing influence of artificial intelligence (AI) presents a compelling investment landscape. In this article, we'll explore three AI-driven stocks that could be worth considering if the September sell-off continues.

Seize the AI-Powered Opportunity

Alphabet: Harnessing the Power of AI Across its Ecosystem

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), the parent company of Google, is at the forefront of the AI revolution. While some may view the rise of generative AI tools as a threat to the company's core search business, the reality is that AI is a significant contributor to Alphabet's growth in multiple ways.Firstly, Alphabet's Google Cloud platform is one of the three hyperscale cloud platforms that developers can leverage to train and deploy their AI software. The cloud business has seen substantial growth, surpassing $10 billion in revenue in the most recent quarter, with profitability soaring as well.Moreover, AI is being integrated into the core Google Search business. The introduction of AI Overviews, which use generative AI to aggregate information from multiple websites and provide concise answers to user queries, has led to increased engagement and satisfaction. Importantly, the advertisements displayed alongside these AI-powered results continue to generate revenue for the company.Alphabet is also exploring ways to incorporate AI into its digital advertising offerings. By leveraging AI tools, the company can help businesses optimize their ad campaigns, generating thousands of iterations to target specific audiences more effectively. This integration of AI into the advertising ecosystem is expected to drive further growth and profitability.Beyond its core businesses, Alphabet continues to invest in its Other Bets, which include various moonshot projects and emerging technologies. This diversified approach, combined with the company's strong cash flow and share buyback program, makes Alphabet an attractive long-term investment, especially at its current valuation of just 19 times forward earnings.

Salesforce: Empowering Businesses with AI-Driven Productivity

Salesforce (NYSE: CRM), the leading enterprise software company, has been making significant strides in leveraging AI to enhance its offerings. While the company has faced some slowdown in revenue growth recently, it has been focused on improving operational efficiency and using excess cash to buy back shares, leading to strong earnings-per-share growth.The key to Salesforce's AI advantage lies in its ability to harness the vast amount of data it has about its customers' businesses. The company's Einstein Copilot, introduced in early 2024, has been helping sales teams and service teams improve productivity and close deals and cases faster by providing intelligent insights and recommendations.The next step in Salesforce's AI journey is Agentforce, which aims to resolve customer service issues, employee tickets, and sales inquiries using the organization's existing data within the Salesforce software suite. Pilot tests have shown that Agentforce can resolve up to 90% of cases, significantly outperforming traditional AI-powered chatbots.Salesforce's AI advantage is further bolstered by the high switching costs associated with its platform. Businesses that have invested in Salesforce's ecosystem find it challenging to migrate their sensitive data and retrain their staff on a new system, making it unlikely that they will abandon the industry-leading platform.At a forward price-to-earnings ratio of just 24, Salesforce's stock appears attractively valued, especially considering the potential for high-margin revenue growth from its AI-powered offerings and the company's ongoing share buyback program.

Taiwan Semiconductor Manufacturing: Powering the AI Chip Revolution

Taiwan Semiconductor Manufacturing (NYSE: TSM), also known as TSMC, is the world's leading chip fabricator, playing a crucial role in the development of cutting-edge semiconductors that power the latest AI-driven technologies.TSMC's scale and technological prowess create a virtuous cycle. As the industry's dominant player, it generates the majority of revenue, allowing it to reinvest heavily in research and development. This, in turn, enables TSMC to stay ahead of the competition, consistently delivering the most advanced chip manufacturing processes.This leadership position ensures that TSMC remains the go-to partner for the biggest tech companies, including Nvidia, Apple, and others, who are all investing heavily in their own AI accelerator chips. As the demand for these specialized AI chips grows, TSMC stands to benefit significantly.Moreover, TSMC's strong margins and the expected average earnings growth of over 20% for the next five years make the stock an attractive investment, especially at its current valuation of less than 20 times 2025 earnings estimates. The September sell-off could present an excellent opportunity for investors to gain exposure to this AI-powered semiconductor powerhouse.In conclusion, the September sell-off, if it continues, may offer savvy investors a chance to capitalize on the growing influence of artificial intelligence. Alphabet, Salesforce, and Taiwan Semiconductor Manufacturing are three stocks that have the potential to thrive in the AI-driven future, making them worthy of consideration for long-term portfolios.