Amid renewed tariff-induced volatility, among other factors, the Nasdaq-100 Index (NDX) slipped nearly 2.5% last week. That sparked fresh fears that current geopolitical and macroeconomic climates remain headwinds to growth stocks. Those headwinds may imply that investors aren’t flocking to AI stocks like Nvidia (NVDA) or ETFs like the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM). That sentiment may be temporarily accurate, but some analysts argue opportunity beckons with the AI trade.

Add to that, the first-quarter retrenchment experienced by AI stocks, including those residing in QQQ and QQQM, has made valuations on the previously richly valued group more enticing. Importantly, that’s true of a variety of high-quality AI stocks, including plenty of members of the QQQ/QQQM rosters.

QQQ Has Some of the Best AI Ideas

Morningstar analyst Tori Brovet recently examined the Morningstar Global Next Generation Artificial Intelligence Index for opportunities among AI equities. In discussing QQQ and QQQM, that index is pertinent. That’s because there’s plenty of overlap between that gauge and NDX, the benchmark tracked by the Invesco ETFs.

It’s also important because the Morningstar index only features stocks rated four or five stars by the research firm and those trading at discounts to fair value of at least 20%. Plenty of QQQ/QQQM holdings check those boxes, including Microsoft (MSFT).

“Microsoft starts our list of the best AI stocks to buy now. The software and cloud provider has established a leading AI portfolio with offerings like OpenAI, which is home to ChatGPT. Last year, we raised our revenue growth estimates and profitability assumptions for Microsoft based on consistent performance and a solid outlook,” noted Brovet.

Another marquee QQQ/QQQM holding that now appears undervalued is Facebook parent Meta Platforms (META), the ETFs’ largest communication services component.

“Top social-media provider Meta Platforms looks 23% undervalued compared with our $770 fair value estimate,” added the Morningstar analyst. “The largest social-media company in the world, Meta boasts close to 4 billion monthly active users worldwide. The firm can drive more ad inventory growth, leveraging new products such as Threads, while improving its monetization of ads.”

Adobe (ADBE), Advance Micro Devices (AMD) and Google parent Alphabet (GOOG) are also among the QQQ/QQQM member firms with leverage to AI that are now attractive on valuation. Alphabet could be one of the standouts of that group.

“We see the firm’s investments in AI as a continuation of this effort to safeguard its core product, Google Search,” concluded Brovet. “We believe that by leveraging generative AI, Google can not only improve its own search quality via features such as AI overviews but also improve its advertising business by augmenting its ability to target customers with relevant ads.”

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