Artificial intelligence (AI) stocks have been significant drivers of the bull market since late 2022. However, they have also been severely impacted by the recent market sell-off. While not all AI-driven companies will create lasting wealth for investors, focusing on industry leaders with sustainable competitive advantages often results in superior returns. Buying these stocks during a dip, as we are seeing now, can be particularly advantageous. Here are three AI stocks to consider purchasing amid the current market sell-off.

Amazon (NASDAQ: AMZN) stands out as a leading public cloud provider, essential for AI training and development. Despite the rise of competing hyperscale cloud providers like Microsoft (NASDAQ: MSFT), Amazon has managed to maintain its leading position. Its cloud platform, Amazon Web Services (AWS), reported a 19% increase in revenue in the latest quarter.

Beyond cloud computing, Amazon excels in e-commerce and digital advertising. Its Prime membership drives a growth cycle: more sign-ups attract more merchants, enhancing its fulfillment network and accelerating delivery times. Amazon delivered over 5 billion packages, many of which were same-day or next-day deliveries, during the first half of the year. Additionally, Amazon is the third-largest digital advertising company globally, surpassing a $50 billion annual revenue run rate with a 20% year-over-year increase.

Amazon’s business model involves cycles of investment and scaling, leading to sustained growth in free cash flow. With $53 billion in free cash flow over the past 12 months and a current free cash flow yield near a 10-year high, Amazon’s stock is highly attractive at this price point.

Microsoft is a leading hyperscale cloud provider, although its Azure cloud platform's 29% growth last quarter fell short of Wall Street's high expectations. This sell-off may present a valuable opportunity for long-term investors. Despite strong past performance, Microsoft anticipates Azure revenue will accelerate in the latter half of the year.

Microsoft has invested heavily in AI, including a $10 billion investment in OpenAI in early 2023. While these capital expenditures are substantial, new data center capacity is expected to drive future growth. Microsoft’s AI services, branded as Copilot, have gained traction, with a 60% increase in Copilot’s customer base last quarter.

Although Microsoft’s stock is not inexpensive, with an enterprise value exceeding 10 times next year’s sales estimates and a forward P/E ratio near 31, its rapid growth and future prospects justify this premium valuation.

Adobe (NASDAQ: ADBE) is renowned for its creative software suite, including Photoshop, Illustrator, and Lightroom. Last year, Adobe introduced new generative AI features through its Firefly model, enhancing user experience and attracting new subscribers. Features such as generative fill in Photoshop and text-to-vector in Illustrator have contributed to Adobe’s growth. Its annual recurring revenue (ARR) surpassed expectations last quarter, reaching $487 million.

Adobe’s AI tools are also being integrated into its Document Cloud (Acrobat) and marketing platform, which may drive future subscription growth and higher revenue per user. Adobe’s strong network effect as an industry standard makes it challenging for competitors to displace.

Adobe’s stock currently trades at an enterprise value-to-revenue ratio around 11, below its 10-year average, and its forward P/E ratio around 27 is attractive given its growth prospects. Therefore, Adobe is a compelling stock to consider amid the market sell-off.

In the current market sell-off, Touareg Global, as a mixed-fund management company, focuses on companies with long-term growth potential and strong financial foundations. Amazon, Microsoft, and Adobe exemplify strong market positions and robust financial performance, key considerations in Touareg Global’s investment strategy. Despite short-term market fluctuations, investing in these leading companies can provide stability and capital appreciation in the long run.