The U.S. equity market remains unpredictable with investors growing increasingly wary of technology stocks amid a challenging macroeconomic environment.
This pullback, however, may prove to be a good entry point for retail investors to pick stakes in high-quality and fundamentally strong artificial intelligence (AI) leaders. Here are three such AI stocks that stand out as top-notch picks now.
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1. Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (TSM +6.30%) has become the backbone of the global AI infrastructure buildout, with its advanced chip manufacturing technology needed to fabricate next-generation GPUs, AI accelerators, and other high-performance custom chips.
TSMC's strong execution in advanced process nodes and packaging was evident from its fiscal 2025's third quarter (ended Sept. 30) results. Revenue increased 40.8% year over year to $33.1 billion, while cost optimization and improved capacity utilization led to a solid gross margin of 59.5%.
Advanced process technologies (7-nanometer and below) accounted for 74% of the wafer revenue, with 3-nanometer alone contributing 23% of the wafer revenue. High-performance computing was the best-performing end market, accounting for 57% of the company's total revenue.
TSMC is making rapid progress in advancing its chip manufacturing technologies. The company expects to commence volume production of chips with N2 (2-nanometer) technology by late 2025. This is expected to be followed by volume production of the higher-performance and improved power usage N2P technology, an extension of N2 technology, in the second half of 2026.
NYSE: TSM
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TSMC also expects volume production with A16 technology, optimized for high-performance computing, in the second half of 2026. The company expects N2's profitability to exceed that of N3 (3-nanometer technology).
The company is also planning to expand its CoWoS advanced chip packaging capacity, as demand exceeds supply. TSMC plans to allocate 10% to 20% of its $40 billion to $42 billion fiscal 2025 capex toward packaging expansion, testing, and other supportive activities.
TSMC has recently produced the first U.S.-made Nvidia Blackwell wafer at its Arizona fab. This validates its Arizona fab's readiness for manufacturing complex AI chips, and could improve relationships with U.S. clients preferring domestic chip production. The company is also focusing on reducing its geographic concentration while positioning itself closer to key clients with specialty fabs in Japan and Germany.
With advanced chip manufacturing leadership, expanding packaging capabilities, and global expansion plans, TSMC may prove a worthwhile buy now.
2. Oracle
Oracle (ORCL +4.75%) has successfully evolved from being predominantly an enterprise software and database company to a core AI infrastructure player. The company's integrated technology stack, which spans CPU and GPU-based compute capacity, storage, and networking products, data platforms, and applications, has enabled it to attract customers such as OpenAI, Meta Platforms, and other hyperscalers. Currently, over 700 customers are using Oracle's accelerated computing services.
In its fiscal 2026's first quarter, (ended Aug. 31), Oracle's performance demonstrated its business momentum. Cloud infrastructure revenue was up 54% year over year to $3.3 billion, while cloud application revenue rose 10% year over year to $3.8 billion.
The company exited Q1 with remaining performance obligations (RPO) of $455 billion, up 359%, a year-over-year increase. However, management expected the RPO to exceed $500 billion by mid-October 2025. The company has committed nearly $65 billion worth of infrastructure capacity to four different customers across seven different contracts in the first 30 days of the second quarter.
NYSE: ORCL
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To meet the surging demand, Oracle is aggressively expanding its capacity. The company has guided for capital investment of $35 billion in fiscal 2026, with a significant chunk allotted for data center equipment. The company has also invested heavily in an AI database platform, enabling enterprise clients to access and analyze private data securely using advanced AI reasoning models. Oracle's multi-cloud database business is also growing at over 1,500% year over year.
Oracle is also focused on agentic AI opportunity, and has 600 agents live across its applications. Currently, 2,400 customers are already using these agents. Considering Oracle's multi-pronged AI strategy and record contracted backlog, the company seems a smart pick now.
3. ASML
ASML Holding (ASML +6.97%) has become a critical enabler of the global AI infrastructure buildout, with its near-monopoly on building advanced extreme ultraviolet (EUV) lithography systems required to manufacture advanced AI processors, accelerators, and high-bandwidth memory chips. The company's deep ultraviolet (DUV) and EUV lithography machines are used to etch intricate circuit patterns on these chips.
Third-quarter performance was impressive, with revenue of 7.5 billion euros and net income of 2.1 billion euros. The company booked 5.4 billion euros of net system orders in the third quarter, including EUV orders worth 3.6 billion euros and non-EUV orders of 1.8 billion euros.
The company is also making solid progress with its next-generation High-NA EUV systems, which are used to print even smaller circuit patterns and features on chips in fewer steps. The company has already processed over 300,000 wafers with this system at customer sites.
NASDAQ: ASML
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Hence, the maturity of these systems is significantly higher than that of traditional EUV systems at the same stage after their introduction in the market. Prominent memory player SK hynix is already taking delivery of its first High-NA EUV system for the future production of advanced DRAM chips.
ASML has invested 1.3 billion euros in Mistral AI, and now holds around 11% stake in the company. This deal will enable ASML to integrate the latter's AI models into its lithography software stack, enhancing the productivity, performance, and cost efficiency of its lithography systems.
The company expects its total sales in China to decline significantly in 2026 due to the normalization of demand. Yet, ASML does not expect its fiscal 2026 revenue to be below that of fiscal 2025, driven mainly by solid adoption of EUV systems for production of advanced logic and memory chips.
Considering its solid competitive moat in EUV lithography, ASML is poised to benefit significantly from the increasing demand for AI chips over the next decade.
