2 Stocks Down 51% and 43% That I Just Made Huge Investments In

While the market pullback in early August may have been short-lived, it created opportunities to buy excellent businesses at much lower valuations. The Nasdaq Composite entered correction territory (defined as a 10% decline from its recent high) and declined nearly 14%, while the S&P 500 flirted with a correction. However, both indices have recovered most of their losses in recent trading sessions.

While some see sharp market pullbacks and rush for the exit, savvy investors see them as fantastic opportunities. Corrections Stock markets are normal and necessary events. They occur on average once a year and are actually healthy. Without periodic corrections, bull markets can overheat and lead to bubbles, which are often followed by deeper crashes that can seriously harm not only the economy, but also the wealth-building process of long-term investors.

So, the best action for long-term investors during a correction is to keep their emotions at bay, stay calm, and take advantage of the volatility by buying stocks of compelling companies at a discount.

I did it with Dell (NYSE: DELL) And Micron (NASDAQ: MU)two companies that are benefiting from the rise of artificial intelligence (AI) and data centers.

Data centers are essential to AI

The shift to cloud computing over the past two decades has required the construction of a multitude of massive data centers (buildings filled with infrastructure, servers, networks, storage equipment, etc.) to process and store data. Without them, business software, online banking, streaming TV, gaming, and many other applications would not function. The rise of AI programs creates another technical challenge.

Generative AI software requires much more processing power than other applications, so more capacity is needed now. Some data centers are small, less than 10,000 square feet, while others are gigantic, over 1 million square feet. So-called hyperscalers like Amazon, Meta, and Alphabet are building these massive centers. Here are some fun facts:

• The United States is home to more than half of the world’s approximately 10,000 data centers.

• 120 new hyperscale data centers could become operational each year over the next 10 years.

• Elon Musk plans to build a massive data center in Tennessee that could hold 100,000 Nvidia (NASDAQ: NVDA) Liquid cooled GPUs.

Dell and Micron will benefit greatly from the surge in data center demand. Both have industry expertise, core products, and long-standing partnerships with AI chip leader Nvidia. But the recent selloff sent their shares plummeting, at one point down 51% and 43%, respectively, before recovering slightly, as shown below.

The story continues

Despite their strength over the past year and a half or so, stocks are still down significantly from their recent highs. Here’s why I’ve taken large positions in both.

Dell, an overlooked AI stock?

Dell divides its business into two segments: the Client Solutions Group…