2 AI Stocks That Are Screaming Buys in April

Jeremy Bowman, The Motley Fool

Tue, Apr 8, 2025, 1:50 AM 4 min read

April has gotten off to about as bad a start as a month can have in the stock market. The S&P 500 plunged more than 10% in a two-day span following President Donald Trump's announcement of global tariffs, and the Nasdaq Composite has now entered a bear market, down more than 20% in less than two months.

While the sell-off may be hard to endure, long-term investors know that falling stock prices are good for net buyers of stocks as they make them cheaper, allowing you to buy more shares. On that note, let's take a look at two AI stocks that are top buys right now.

Arm Holdings (NASDAQ: ARM) has been an expensive stock since its initial public offering (IPO) in September 2023, but it's now trading down roughly 50% from its all-time high, making it less expensive than it's been at any time in more than a year.

While the semiconductor sector is cyclical, Arm is more resistant to macroeconomic pressures than its peers due to its unique business model. Arm licenses its CPU architecture to companies like Apple and Nvidia, and then collects royalty revenue once the products with those designs are sold.

That's proven to be a resilient business model as Arm already has royalty revenue in its pipeline, since it typically takes two years for its customers to go from licensing to production. Half of Arm's royalty revenue comes from designs that are at least 10 years old, showing its designs have a long shelf life.

Arm also has a competitive advantage in its industry because its architecture requires significantly less power than competing alternatives such as the x86 architecture from Advanced Micro Devices and Intel. That's given it dominant market share in the smartphone segment and growing market share in cloud computing.

Its forward P/E is now down to 55, which looks like a great price to pay for a stock with Arm's competitive advantages and growth potential.

Another stock that has plunged in the last several weeks is AppLovin (NASDAQ: APP), a high-flying adtech stock. AppLovin was hounded by short-sellers, in part, because of skyrocketing growth last year. The stock has plunged due to its lofty valuation and fears about a slowdown in the economy, especially after Trump's global tariffs announcement.

The short-seller charges appear to be trumped up, targeting the stock because of its rapid growth as the company has emerged as a leader in advertising software. Its purpose-built Axon AI-based recommendation engine has delivered extraordinary growth after being trained on the company's mobile games.