Key Points
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Synopsys plays a critical role in AI chip design and should benefit from the AI infrastructure build-out.
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Constellation Energy has a vast energy portfolio that should continue to gain value as AI data center constructions accelerate.
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Microsoft’s cloud revenue is still surging higher and lifting the entire business.
- 10 stocks we like better than Synopsys ›
Artificial intelligence has been the defining trade of the 2020s, and many of the top performers are up so far this year. However, there are a few laggards that investors have missed. These companies have continued to strengthen their fundamentals even as investors look the other way.
Stocks tend to reward people in the long run if they continue to gain market share. This general rule makes these three AI stocks look destined for rebounds.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
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1. Synopsys
Synopsys (NASDAQ: SNPS) designs AI chips. Its Electronic Design Automation enables it to create chips at scale, and its intellectual property keeps most competitors out of its industry. It also ensures customers are deeply involved across Synopsys’ product portfolio, which enables chip creation.
The leading chipmakers use Synopsys, and the company recently secured an expanded partnership and $2 billion investment from Nvidia.
This strategic position makes Synopsys’ 12% year-to-date decline all the more jarring, especially as the company continues to gain market share. It reported 42% year-over-year revenue growth in its fiscal 2026 second quarter and raised its full-year revenue guidance.
The company’s landmark $35 billion Ansys acquisition helped it gain more market share, but it’s why margins have been tight in the short run. Amortization costs have been expensive, but once those expenses start to wind down, Synopsys is well-positioned to deliver higher margins for investors. It’s an attractive long-term buying opportunity, but it’s mired in a short-term correction.
2. Constellation Energy
Constellation Energy (NASDAQ: CEG) is the leading producer of clean, reliable energy. It has 55 gigawatts of capacity from nuclear, natural gas, and other energy sources, providing around-the-clock baseload generation for AI data centers. It gets to sign long-term deals with tech companies without pouring substantial capital into building data centers.
The company explained why revenue surged 61% year over year in the first quarter and told investors to expect “strong, visible cash flow” throughout the year. A 22.3 P/E ratio ought to be the icing on the cake, but shares are currently down by roughly 30% year to date.
Some investors didn’t like it when the company acquired U.S. power producer Calpine for $16.4 billion. The stock is still down from when Constellation Energy announced the acquisition in January 2025. Investors saw it as a move that increased debt and dilution while shifting resources toward cyclical gas rather than nuclear energy.
Constellation Energy is still trending in the right direction and is expected to guide for 20% EPS growth from 2026 to 2029. Multiyear tailwinds should boost the value of Constellation Energy’s energy portfolio and can help the stock navigate past this current correction.
3. Microsoft
Not every hyperscaler has outperformed the S&P 500 (SNPINDEX: ^GSPC) this year, and Microsoft (NASDAQ: MSFT) is one of them. It’s down by more than 15% year to date and has received some price target cuts from Wall Street analysts, but the doom and gloom is a bit overdone at this point.
Microsoft is a leader in cloud computing, which positions it well for the AI boom. The tech giant’s AI business more than doubled its annual revenue run rate year over year in its fiscal 2026 third quarter. The overall numbers were solid. Revenue increased by 18% year over year, and net income jumped by 20% year over year.
Those growth rates go along with a 23 P/E ratio. That valuation, combined with Microsoft’s long-term opportunities, suggests that the stock is undervalued at current levels.
Microsoft executive vice president Amy Hood cited “growing demand for Microsoft Cloud” in the most recent quarter. Cloud revenue grew faster than the overall business, accounting for more than half of Microsoft’s Q3 FY26 revenue. This trend can accelerate overall revenue across Microsoft’s business.
Should you buy stock in Synopsys right now?
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Constellation Energy, Microsoft, Nvidia, and Synopsys. The Motley Fool has a disclosure policy.
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