Top 3 AI Stocks to Buy During a Market Downturn

The impact of artificial intelligence (AI) extends far beyond just a trend; it's a transformative force in various industries. Many companies are at the helm of this technological evolution. However, as investors seek substantial returns, some AI stocks have become disproportionately expensive despite their growth potential.

Current market evaluations, including indicators like the S&P 500 Shiller CAPE ratio, suggest an overvaluation reminiscent of the dot-com bubble days. If a bear market occurs, three companies stand out as strong buy opportunities: Space Exploration Technologies, CoreWeave, and Tesla. Let’s delve into why these stocks could be appealing.

Space Exploration Technologies: A Leader in Innovation

Space Exploration Technologies, commonly known as SpaceX, has revolutionized the space industry, notably through reusable rockets that slash launch costs. Recently, the company's expansion into AI, branded Super Intelligence (SI), has gained traction since its public debut.

In the latest quarter, SpaceX reported a remarkable 161% year-over-year revenue increase, reaching $14.6 billion. Growth segments include:

• Space revenue: Up 6% YOY to $1.8 billion
• Super Intelligence revenue: Surged by 830% YOY to $7.6 billion
• Connectivity revenue: Increased by 69.5% YOY to $5.2 billion

Super Intelligence has quickly become a key revenue driver, now constituting over half of SpaceX's total revenue and demonstrating profitability, boasting an operating income of $431 million compared to an operating loss of $1.7 billion from the previous year.

CoreWeave: Growth Amid Rising Demands

CoreWeave, a prominent player in the neocloud space, is witnessing a surge in demand for its AI services. The company reported a substantial 112.5% year-over-year revenue growth, hitting $2.6 billion, with a revenue backlog of $104 billion—up 245.5%. However, this growth comes with a caveat: significant investments in AI infrastructure have led to escalating debt levels.

In its recent quarter, CoreWeave experienced:

• Operating loss: $49 million, a drop from an operating income of $19 million last year
• Net loss per share: Increased to $1.14 from $0.60 in the prior-year quarter

CoreWeave has successfully raised over $30 billion this year, suggesting robust confidence in continued AI expenditure. However, with a single client contributing 67% of its revenue in 2025, the risk of customer concentration raises flags. Investors might find CoreWeave enticing but should consider waiting for a decline of 15% to 20% before purchasing to mitigate risk.

Tesla: A Unique Approach to AI

Tesla, while not an AI compute service provider like its counterparts, integrates AI deeply into its operations. The company is actively developing AI-centric projects such as its robotaxi service and humanoid robots, which could set the stage for significant market opportunities.

Tesla's AI technologies are crucial for improving self-driving technology, and if successful, the Optimus robot could find substantial applications in manufacturing and even households. The potential for profit from its robotaxi service is considerable, contingent on successful scaling.

While these developments hold promise, uncertainty looms regarding regulatory challenges and market acceptance. Given Tesla’s forward price-to-earnings ratio of 163.2x, it would be prudent to seek a lower entry point during market corrections before initiating a position.

In summary, the potentially game-changing nature of AI continues to attract attention. While the stock values of companies involved in AI may be high, both SpaceX and CoreWeave, along with Tesla, could be worth investing in if an opportunity arises during a market downturn.