Artificial intelligence (AI) stocks are starting to sell at discounted prices thanks to negative sentiment related to recently released Oracle (ORCL 2.00%) and Broadcom (AVGO 1.21%) earnings results.
Oracle stock dropped because investors are worried about how OpenAI will afford its $300 billion deal for cloud computing space, and that doesn't even include OpenAI's deals with AI chipmakers. Meanwhile, Broadcom delivered excellent results for its AI sales, but margin worries and a strong run-up ultimately sank the stock after earnings. The AI chipmaker anticipates margins to drop by about 1% in Q1 FY26.
Several AI stocks saw their stock prices drop after this one-two punch, but it has resulted in plenty of great deals in the stock market. Here are two AI stocks to buy in December.
Image source: Getty Images.
Big tech recognizes IREN's value
Iren (IREN 1.31%) is an Australia-based AI specialist that's working to solve the energy bottleneck plaguing data centers. The data centers it builds are touted as operating on 100% renewable energy. It recently signed a five-year, $9.7 billion deal with Microsoft that showcases the company's potential. Some investors grew wary of the company after Iren raised $2.3 billion in convertible notes, but part of the money went toward getting rid of debt with less favorable terms. It's a short-term share dilution to lower the overall dilution and attain better financing in the long run.
Iren's stock trades down by almost 50% from its peak in early November, which seems like a sharp overreaction. Yes, IREN has had one of the biggest run-ups of the year (up 271% in 2025, even after the price drop), but Oracle's and Broadcom's woes are not related to Iren in any way.
Iren has real long-term potential to sign several deals like the Microsoft one. The company anticipates generating $3.4 billion in annual recurring revenue by the end of fiscal 2026. That's up from $16.4 million in fiscal 2025 revenue from AI cloud services.
One more big tech deal like the Microsoft one lets Iren achieve its goal. Jumping from $16.4 million to $3.4 billion in annual recurring revenue is exceptional. That's why the stock is rallying so much, and growth is likely to continue into 2027 and beyond.
That type of financial transformation is hard to ignore, especially with Nvidia hosting a private summit in December to discuss solving AI data center power problems. Iren thinks it has a solution that solves this problem, and when you have big tech as your customers, it's feasible for Iren to deliver parabolic revenue growth for the rest of the decade.
Alphabet may become the most valuable company
Alphabet (GOOG 1.52%) (GOOGL 1.43%) has emerged as one of the best AI stocks. The company started as a search engine with profitable online ads, but it now has a diversified business that includes cloud services, smartphone software, streaming content platforms, autonomous vehicles, and AI chip development and sales. The latter two segments are relatively new and are still speculative, high-potential parts of the business.
Alphabet has strong financials and cash flow from its online ads and cloud platform, which makes it easier to spend money on AI initiatives. Alphabet is one of the few companies that can spend billions of dollars on AI each quarter without worrying about its balance sheet. That gives Google's parent company a significant advantage over smaller, speculative AI stocks that might deliver higher returns but could run into cash flow issues before realizing their full potential.
Alphabet's latest earnings results further showed how much market share it has gained in AI. Overall Q3 revenue jumped by 18% year over year, but Google Cloud revenue surged by 34% year over year.
Alphabet could give investors solid results right now, with many exciting opportunities in the pipeline. The company received interest in its AI chips from Meta Platforms, which could translate into billions of dollars in additional revenue.
Plus, Google's parent company isn't affected by the recent reports coming from Oracle and Broadcom. If anything, OpenAI's weaknesses translate into Alphabet's gains. If OpenAI has to get more financially defensive due to mounting losses, Alphabet can gain market share with its Gemini AI model.
Alphabet's AI ventures could turn it into the most valuable company, even above Nvidia. Its 31 P/E ratio is a reasonable valuation, and if profits continue to expand, Alphabet may deserve a higher multiple.
