Key Points
Shares of semiconductor giant Nvidia are rallying back after a brief bear market.
Broadcom shares are surging as more investors see its value in the AI industry.
Google parent Alphabet now has the market's second-largest market capitalization.
The market in general -- and stocks in the artificial intelligence (AI) industry in particular -- continue to prove their resilience. Despite fears of a market downturn, the S&P 500 and Nasdaq Composite have again reached all-time highs. For investors who bought through dollar-cost averaging (DCA), they are likely ahead on those investments.
Admittedly, some fear is justified. The Shiller P/E ratio of 40 takes it close to record highs, and since the conflict in Iran is not over, a DCA approach likely continues to make sense. Still, these AI stocks have rallied with this recovery, and whatever happens in the near term, these stocks could continue to outperform.
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An AI chip on a board.
Image source: Getty Images.
Nvidia
After losing as much as 20% of its value, Nvidia (NASDAQ: NVDA) rallied back to its all-time high. The company continues to benefit from its dominance of the AI accelerator market, and the fact that it cannot keep pace with demand almost ensures its growth will continue.
Indeed, investors may feel torn about Nvidia. At $4.9 trillion, it has the world's largest market cap. Such conditions may motivate investors to invest in smaller companies with an easier path to faster growth.
However, the state of Nvidia arguably demands that one put such misgivings aside. For one, its $216 billion in revenue in fiscal 2026 (ended Jan. 25) rose 65%, a massive level given that higher percentage growth is comparatively more difficult for larger companies.
Amid the high cost of keeping pace with demand, its net income of $120 billion grew by 65%. Also, despite that growth rate, Nvidia sells at a P/E ratio of just 41. That indicates that even if Nvidia might possibly frustrate some growth investors, they may be best best served by staying with the AI giant.
Broadcom
Broadcom (NASDAQ: AVGO) is another AI stock currently rallying. Since bottoming in late March, it is up by more than 35%. Broadcom's strength in custom-made semiconductors has helped make it a leader in custom AI silicon. Also, it has emerged as a leader in AI networking, allowing data to move between numerous chips seamlessly, making it the "glue" holding the industry together.
Moreover, the company has successfully integrated the VMWare purchase into its company, making it a subscription model with recurring revenue and streamlining its operations. Although VMWare and past acquisitions have made it more of a software company, the stock has likely rallied back thanks to AI.
With that, Broadcom followed its 24% revenue growth in fiscal 2025 with a 29% yearly increase in the first quarter of fiscal 2026 (ended Feb. 1) to over $19 billion.
Also, shrinking operating expenses led to 292% net income growth in fiscal 2025. While it is not on track for more triple-digit profit growth, the company increased its net income by 34% yearly in the first quarter of fiscal 2026.
With a 79 P/E ratio, Broadcom may appear expensive. Still, with a forward P/E ratio of 36 and a booming AI business, the rally appears to be on track to continue.
Alphabet
Like Nvidia, Google parentAlphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) also briefly reached bear market territory before recovering. Since that bottom, the stock has rallied nearly 25%.
That pullback turned out to be a brief interruption to its dramatic recovery since the "Liberation Day" fallout in April of last year. Consequently, its $4.1 trillion market cap is the second largest behind Nvidia on U.S. markets.
For now, digital advertising still made up 73% of revenue in 2025, but the rise of AI is gradually shifting its revenue breakdown. In 2026, revenue increased by 36% for its Google Cloud segment, and Google Gemini has emerged as a leading AI engine. Additionally, as autonomous driving takes off, it could turn Waymo into a major revenue source, further boosting the company.
In 2025, revenue for the overall company grew by 15% to almost $403 billion. Also, since it kept cost and expense growth in check, its net income rallied by 32% over the same period.
Fortunately, the rally is in a strong position to continue. Its P/E ratio is 32, which is arguably reasonable given the company's pace of profit growth. As business capitalizes more on AI, it should bode well for Alphabet and its shareholders.
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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Broadcom, and Nvidia. The Motley Fool has a disclosure policy.