3 AI Stocks Worth Buying Now with Just $400

The article highlights three promising AI stocks—Microsoft, Adobe, and Applied Materials—that are currently undervalued following a market downturn. Each stock demonstrates strong growth potential, solidifying their positions in the AI landscape, making them ideal for investment with a $400 budget.

Artificial intelligence (AI) stocks were pivotal in the S&P 500’s stellar performance over 2023 and 2024, but they faced significant declines in 2025. While some top AI stocks have faltered, this downturn has created lucrative opportunities for savvy investors seeking entry points in leading companies across cloud computing, software, and semiconductors. With just $400, you can invest in three standout AI stocks that are currently undervalued.

1. Microsoft (NASDAQ: MSFT)
Microsoft has been a key investor in OpenAI, positioning itself at the forefront of the AI boom. The Azure cloud computing platform has experienced impressive growth, with revenue from AI services skyrocketing by 157% year-over-year. Microsoft actively integrates AI into its enterprise software, enhancing productivity tools. Currently, shares are priced at about $370, offering a forward price-to-earnings ratio of 28—a worthy investment considering its dominant market stance and robust cash flow.

2. Adobe (NASDAQ: ADBE)
Despite perceptions that AI could disrupt its business, Adobe is proactively incorporating AI with its Firefly model, enhancing its creative software offerings. Features like Generative Fill in Photoshop enrich user experiences and drive revenue growth. With an anticipated revenue increase to $30 billion by 2027, Adobe trades at just 17 times its forward earnings, presenting a solid investment opportunity. The company’s high switching costs for current users further bolster its market strength.

3. Applied Materials (NASDAQ: AMAT)
As the world’s leading supplier of wafer fabrication equipment, Applied Materials plays a crucial role in the AI semiconductor supply chain. Its significant market position allows it to invest heavily in R&D, ensuring its technology remains cutting-edge. Downtime costs deter semiconductor manufacturers from switching suppliers, reinforcing Applied’s market share. Post-market declines have reduced its share price below $140, resulting in a forward P/E of just 14.8—a compelling proposition for long-term investors.

Before investing, it’s wise to consider that while Microsoft is a strong player, the Motley Fool Stock Advisor highlights other stocks that could outperform—delivering the potential for significant returns based on past recommendations.

Investing in artificial intelligence stocks still holds potential for savvy investors, especially those considering leading companies like Microsoft, Adobe, and Applied Materials. Each presents unique advantages and growth prospects, with current market conditions providing attractive entry points. For $400, diving into these stocks could yield substantial long-term benefits as the AI landscape continues to evolve.

Original Source: www.nasdaq.com