3 Artificial Intelligence (AI) Stocks to Buy on the Post-Election Dip and Hold for 5 Years
The Motley Fool ·
Key points
- Apple operates its own data centers but relies less on aggressive data-center buildout than peers, reducing exposure to potential regulatory slowdowns. Its latest quarterly results show sustained momentum driven by the iPhone ecosystem, underpinning a strong renewals cycle and durable revenue growth.
- Apple reported $114.5 billion in sales for its fourth quarter of 2026 (period ending Sept. 26), marking multi-quarter double-digit YoY growth and signaling robust underlying demand beyond AI-specific services.
- Alphabet faces potential headwinds from stricter data-center expansion rules, given its heavy AI investments and recent negative free cash flow, but benefits from a diversified revenue base dominated by advertising and substantial existing capacity.
- Alphabet’s breadth—anchored by Google search and YouTube—positions it to weather restricted expansion, with the possibility that rising capacity costs could raise margins for incumbent owners of existing facilities if new-build slows.
- Microsoft, a leading hyperscaler, could see steady demand for current compute capacity if AI expansion slows due to regulation. Its revenue profile is bolstered by long-term software contracts and a sizable pipeline of obligations, with about 677 billion in commercial remaining performance obligations as of Sept. 30, 2026, of which roughly 30% is expected to be recognized in the next year.
- Microsoft’s dividend, coupled with strong legacy services demand, enhances its appeal as a relatively resilient earnings engine amid regulatory and market fluctuations, suggesting favorable total returns even in a capped AI-growth scenario.
Summary
Following the midterm election-driven volatility, the piece argues that AI stocks may recover and outperform over the next five years, spotlighting Apple, Alphabet, and Microsoft as top buys after a dip. Apple’s modest data-center exposure and strong iPhone-driven growth support resilience, with quarterly revenue of about $114.5 billion illustrating ongoing momentum. Alphabet’s diversification and pricing power could counterbalance regulatory headwinds that threaten data-center expansion, while Microsoft’s hyperscale position and large long-term contracts provide a ballast against near-term headwinds. Across the trio, the long-run AI expansion remains the central thesis, with regulatory constraints and demand dynamics shaping the near-term path. The outlook suggests continued upside if AI demand deepens and competitive pressures ease, even as policy scrutiny could alter growth trajectories.
This summary was written with AI. The full story has every detail.