<div id="readability-page-1">Over the past three weeks, the AI bubble has deflated. Investors are demanding a higher return on AI spending, while others like Elliott Management have raised questions on valuations. However, in the recent selloff, some of the best AI stocks have been thrown out with the bath water. Going forward, AI stocks will face increased scrutiny. Investors want to see a return on investment and actual AI revenues. Only stocks with demonstrable and real-life AI use cases will get a lift. The three stocks discussed below are already generating billions in AI revenues. Additionally, in their recent quarterly earnings calls, their executives outlined the significant demand they were seeing. Indeed, all disclosed they were struggling to meet demand since they were supply-constrained. After being unfairly punished in the recent selloff, these three companies are among the best AI stocks to buy. <h2>Microsoft (MSFT)</h2> <div id="2917586"><img src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="300" height="169" original-src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif"/>Source: VDB Photos / Shutterstock.com</div>Although Microsoft (NASDAQ:MSFT) saw a mixed reaction after the recent Q4 results, it’s still one of the no-brainer AI investments. The major bone of contention was its Azure cloud numbers, where it only achieved the low end of its guidance. However, putting the numbers into context, Azure public cloud grew 30% year-over-year (YOY), the highest growth rate among the top three cloud providers. To put it succinctly, the market is fretting over nothing, and Microsoft is one of the best AI stocks to buy today. First, regarding Azure growth, management issued guidance for 28.5% growth in Q1 2025. The positive guidance reinforces management’s view that adoption of its AI services running on Azure will accelerate in the second half. Beyond Azure AI, Microsoft has several streams of AI revenues. On the earnings call, management disclosed that Microsoft 365 copilot users increased over 60% quarter-over-quarter. Another AI product, GitHub Copilot, is seeing widespread adoption, with over 77,000 organizations using it. Additionally, over 480,000 organizations are using AI-powered capabilities on its Power Platform. At the end of the quarter, it had over 48 million users, a 40% YOY increase. The examples above highlight that this tech giant has numerous ways to monetize AI. Bank of America (NYSE:BAC) views it as a uniquely positioned AI winner and raised its price target to $510. That target presents over 27% upside from current levels. <h2>Advanced Micro Devices (AMD)</h2> <div id="2556940"><img src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="300" height="169" original-src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif"/>Source: JHVEPhoto / Shutterstock.com</div>Powered by AI demand, Advanced Micro Devices (NASDAQ:AMD) delivered impressive Q2 results. Among semiconductor stocks, it has a well-rounded exposure to AI and is a bargain buy after falling nearly 40% from its March highs. Regarding AI revenues, AMD is benefiting in several ways. First, in the data center market, where it competes with Nvidia (NASDAQ:NVDA), it saw explosive growth in Q2. Due to robust demand for its Instinct accelerators, data center revenues soared 115% YOY to $2.8 billion. MI300, its AI data center chip, surpassed $1 billion in quarterly revenues for the first time. Secondly, the company is seeing tremendous demand for its AI-enabled Ryzen processors. These processors deliver industry-leading performance and have the fastest neural processing units. They have been well received by customers such as HP (NYSE:HPQ) and Lenovo (OTCMKTS:LNVGY). The first Ryzen AI 300 series notebooks are already on the market and have garnered very positive reviews. Based on the early success of its Ryzen processors, CEO Lisa Su expects market share gains, especially in Copilot Plus PCs. This leadership and the increasing innovation cadence in its AI accelerators point to increased momentum going forward. Under this backdrop, management sees 15% QOQ growth in the third quarter and unprecedented opportunities over the long term. <h2>Taiwan Semiconductor Manufacturing (TSM)</h2> <div id="2808104"><img src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="300" height="169" original-src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif"/>Source: Piotr Swat / Shutterstock.com</div>One of the best plays on the ongoing AI boom is Taiwan Semiconductor Manufacturing (NYSE:TSM), a pure-play foundry business. Since most semiconductor designers like Nvidia, Advanced Micro Devices and Apple (NASDAQ:AAPL) are fabless, they outsource their chip manufacturing. Taiwan Semiconductor has an almost unassailable lead in this sphere, especially in advanced nodes, and is seeing unprecedented demand. Today, there is no credible competitor to Taiwan Semi’s leading-edge production and the local packaging and assembly ecosystem in Taiwan. Because of this dynamic, the company reported Q2 revenues of $20.8 billion, up 33% YOY and 10.3% sequentially. Strong demand for the company’s industry-leading 3 and 5-nanometer technologies drove the impressive quarter. What’s more, management highlighted that they saw strong AI-related demand that drove higher utilization rates. They noted that supply for 3nm and 5nm was tight and demand was solid through 2026. Consequently, they raised their 2024 revenue growth guidance from low to mid-20s percent to slightly above mid-20s. Taiwan Semi dominates the foundry business, producing over 60% of the world’s logic semiconductors. Yet, despite this dominance and the struggles at key competitor Intel (NASDAQ:INTC), you can buy TSM stock at a market multiple. At 25 times forward earnings, the stock is a screaming bargain. On the date of publication, Charles Munyi had a long position in AMD but did not hold (either directly or indirectly) any positions in other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article. Charles Munyi has extensive writing experience in various industries, including personal finance, insurance, technology, wealth management and stock investing. He has written for a wide variety of financial websites including Benzinga, The Balance and Investopedia.Artificial Intelligence, TechnologyGrowth Stocks </div>

The AI bubble has deflated, leading investors to demand higher returns on AI spending. However, some of the best AI stocks have been undervalued in the recent selloff. Stocks with real-life AI use cases and demonstrable revenues are expected to perform well. Microsoft, Advanced Micro Devices, and Taiwan Semiconductor Manufacturing are among the top AI stocks generating billions in AI revenues.

- The recent AI bubble deflation has led investors to demand higher returns on AI spending, with concerns raised on valuations by entities like Elliott Management.
- Despite the selloff, top AI stocks are poised for scrutiny, with a focus on demonstrating real AI use cases to drive investment returns.
- Companies like Microsoft, Advanced Micro Devices, and Taiwan Semiconductor Manufacturing are highlighted for their substantial AI revenues and strong market positions, making them attractive AI stock options.

The 3 Best AI Stocks to Buy in August 2024