'We would use this dip to buy': A CIO says load up on these 8 beaten-down AI stocks poised to rebound

David Katz, CIO of Matrix Asset Advisers, sees the latest AI sell-off as a buying opportunity.
Katz shared eight AI-linked stocks to buy with a 12-18 month time horizon.
They include infrastructure firms like Applied Materials and hyperscalers like Amazon.

The recent hiccup in the AI trade has dragged the Nasdaq 100 toward correction territory, but it represents a major buying opportunity for some stocks, according to David Katz, the chief investment officer of Matrix Asset Advisers.

A big debate on Wall Street lately has been whether jumping back into the AI trade is a smart move or if it amounts to catching a falling knife. With rising borrowing costs and uncertainty around monetization, some have argued that the sell-off that started in October is an inflection point, and that further downside for tech awaits. Others argue the pain could is over and it's time to buy.

Katz counts himself in the latter camp, saying the de-risking event has been sentiment-driven, and will soon reverse.

"The market right now is driven by a lot of momentum and sort of less educated money just buying the trend," Katz told Business Insider on Tuesday. "So when the trend was great, people were buying as much as they could, and now that you've had this pullback, people are dumping these stocks just the same. And we think that selling has created the opportunity."

He added: "We definitely don't think the AI buildout and the data center buildout is over," and said in an email that "we would use this dip to buy."

To play an eventual rebound, Katz highlighted eight AI-related stocks he'd be buying that have strong potential to rally over a 12- to 18-month timeline.

Four are "picks-and-shovels" plays, and the other four are hyperscalers spending big on the AI infrastructure infrastructure and betting on their ability to monetize the technology.

Below are Katz's picks and commentary on each.

Applied Materials

Ticker: AMAT

2027 estimated PE ratio: 21.0x

October 2026 returns: -23.7%

What they do: Produces systems that help manufacture semiconductors

Commentary: "Their business is robust. They see their pipeline of at least 2-3-plus years. The stock had had a great run-up, and it's given a good deal of it back. So we think it's a good entry point here for its next leg higher."

Generac

Ticker: GNRC

2027 estimated PE ratio: 14.2x

October 2026 returns: -4.4%

What they do: Generator producer

Commentary: "Generac, which used to be the largest home backup, has now added a new business line in providing backup generators to data centers. They've scored two very large contracts, and we think there are more in store. So they've turned themselves into a pretty good little growth business, and they're still selling at a reasonable price."

Qualcomm

Ticker: QCOM

2027 estimated PE ratio: 16.2x

October 2026 returns: -10.5%

What they do: Chipmaker

Commentary: "One of the points they make in their calls is that if you think that the world is going to go toward robotics, and you think Tesla and SpaceX are the biggest robotics play, that Qualcomm is number two because it's all their chips that are going to be powering all of these robots."

"The stock has sold off from like a $235 to a $165 level, and we think that's a really good entry point."

TE Connectivity

Ticker: TEL

2027 estimated PE ratio: 15.8x

October 2026 returns: +0.9%

What they do: Electronic components manufacturer

Commentary: "The concern with TEL is that as these data centers move to fiber optic connections rather than copper connections, their business is going to slow. The proof is in the pudding: their business has continued to grow at a pretty healthy slip."

Alphabet

Ticker: GOOG

2027 estimated PE ratio: 18.4x

October 2026 returns: -18.3%

What they do: Search leader, cloud provider, and more

Commentary: Katz said that Alphabet's management team is trustworthy and has a track record of spending wisely. Plus, if the AI trade were to start to unwind and capex pulls back, Alphabet is one of the hyperscalers whose stock price would benefit.

Meta Platforms

Ticker: META

2027 estimated PE ratio: 17.3x

October 2026 returns: -15.2%

What they do: Social media giant

Commentary: Katz said he doesn't trust Meta's spending discipline as much, thanks to its Metaverse flub in the last few years.

However, he said its Muse AI agent is a "game changer" and makes him bullish on the stock.

"It is incredible," Katz said. He added: "One of the things Meta has is 3 billion users, so it's seemless for them to advertise Muse if you're on Instagram or on Facebook."

Microsoft

Ticker: MSFT

2027 estimated PE ratio: 26.1x

October 2026 returns: +1.8%

What they do: Business processes provider, cloud provider

Commentary: Katz said Microsoft also falls into the category of having trustworthy management, and would act as a hedge to a decline in AI spending. So, it's a winner in either scenario, the way Katz sees it.

Amazon