3 AI Stocks to Buy Amid This Deep Correction
3 AI Stocks to Buy Amid This Deep Correction
Marc Guberti, The Motley FoolTue, October 20, 2026 at 2:05 PM UTC
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Image source: Getty Images.Key Points -
Sandisk's revenue more than quadrupled year over year, and its stock buyback program has expanded sharply.
Nebius is commanding higher rates from hyperscalers and AI labs, enabling faster revenue scaling.
Comfort Systems USA is building key parts of AI data centers and boasts a huge $14 billion backlog.
10 stocks we like better than Sandisk ›
The past few weeks have been tough for many artificial intelligence (AI) investors. A hot inflation report, AI financing concerns, and Chinese memory chips are some of the headwinds that have stalled the rally.
However, a few bad weeks don't justify exiting positions. In fact, these are the exact times when contrarian investors load up on positions and get greedy when others are fearful.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
These three AI stocks below have endured steep price cuts even though their fundamentals continue to improve.
1. Sandisk
This memory chipmaker is down by roughly 30% in less than one month, showing that the AI correction is even hitting big-name companies. Perhaps the narrative will shift when Sandisk (NASDAQ: SNDK) reports earnings on Oct. 29, but there is already plenty to like about the stock.
Sandisk produces NAND flash memory products that are critical as AI models, agents, and inference require vast amounts of memory capacity. Without sufficient memory, these products stop working or experience significant drops in quality.
People have become accustomed to AI models like ChatGPT, Gemini, and Grok handling their questions and providing actionable information in ways that a basic search can't. All of the data centers powering AI tools need NAND flash products, like the ones Sandisk offers.
While Sandisk isn't the only NAND flash memory provider, it's certainly the industry leader. That explains why Sandisk more than quadrupled its revenue year over year and authorized an additional $14 billion for stock buybacks. The dip comes at a good time for Sandisk's buyback program and for investors focused more on where the company is heading in five years than on what has happened to its stock price over the past month.
2. Nebius
High-volatility growth stocks usually get hit the hardest during these types of corrections, so it's no surprise that Nebius (NASDAQ: NBIS) has taken a beating over the past month. It has dropped by more than 30% in approximately two weeks despite parabolic demand for AI compute.
Nebius' Q2 shareholder letter explained that the company can sell out all of its 2027 capacity right now but is intentionally waiting it out because megawatt values keep climbing. Long-term contracts are now yielding $20 million to $25 million per megawatt each year, but Nebius is also signing short-term deals in the $40 million to $50 million per megawatt range.
The neocloud provider is also getting its customers to foot most of the bill for data center construction. Approximately 70% of deals come with prepayments, and those funds cover 50% to 60% of associated capital expenditures. Nebius can fill in the gap with GPU financing, bonds, and using its completed data centers as collateral.
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Nebius and other neoclouds have slumped more than most AI stocks, as CoreWeave's bond yields have reached 15%. However, this is a CoreWeave problem that is being misinterpreted as a neocloud problem. That should become clearer when Nebius reports earnings in November.
3. Comfort Systems USA
Comfort Systems USA (NYSE: FIX) hasn't been as bruised as the other two stocks on this list, but it's still down by more than 20% in less than two weeks. The company specializes in HVAC, electrical, and plumbing for large facilities. That puts it nicely at the intersection of the AI boom, which contributed to the company's 51% year-over-year revenue growth in the second quarter.
The company's Q2 revenue reached $3.27 billion compared with a backlog of $14.06 billion. As more data centers are built, revenue should continue to increase. Those same data centers will also need regular maintenance, which opens up long-term revenue streams for the company.
Comfort Systems USA uses an acquisition strategy to gain market share rapidly and make it more difficult for competitors to catch up. It consists of more than 50 companies spread across 184 locations in the United States. That growth also comes with solid finances. Comfort Systems USA managed to boost its dividend by 12.5% this year thanks to surging profits.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Comfort Systems USA. The Motley Fool has a disclosure policy.
Source: “AOL Money”
