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Nasdaq Correction: Focus on Two AI Stocks Worth Buying

Investors eye AppLovin and Arm Holdings amid Nasdaq correction. Despite market downturns, these AI stocks show promising growth and potential for recovery in the tech landscape.

Date: 
AI Rating:   7
Market Overview
The report highlights the stabilization of Nasdaq Composite stocks, yet notes the index remains in a correction phase due to factors such as weakening consumer sentiment and concerns regarding tariff implications.

AppLovin Analysis
AppLovin (NASDAQ: APP) has witnessed extraordinary performance despite its recent downturn. The company has seen a 2,870% increase in stock price since the beginning of 2023, driven by its evolution from a mobile game developer to a leading adtech platform. Notably, advertising revenue surged by 75% in 2024, amounting to $3.2 billion, with total revenue reaching $4.7 billion. Furthermore, net income rose an impressive 343% to $1.58 billion, indicating robust profitability. However, the stock has corrected about 40% from its peak, and while it retains a high P/E ratio of 69, its valuation appears more reasonable now. Concerns over advertising's vulnerability to economic downturns contextualize this fall, but the company's advancements in adtech may justify a purchase for long-term investors.

Arm Holdings Analysis
Arm Holdings (NASDAQ: ARM) operates on a distinct business model where it licenses its CPU architecture rather than selling chips directly. This model potentially shields it from immediate recession impacts, with much of its revenue tied to long-standing products. The company is experiencing increased demand for AI products and has stable royalty revenue, primarily from products launched a decade ago. Despite experiencing a 21% decline in the last month, its price-to-sales ratio at 34 reflects its competitive advantages and growth potential. Given the market opportunity in AI, this stock remains a substantial buy on the current dip.

The report indicates that both AppLovin and Arm Holdings possess strong figures, particularly concerning net income and revenue growth, as well as a potential upside in future valuation. Hence, for investors considering stocks within the correction, these two present intriguing options.
Stocks:  APP ARM