2 Beaten-Down AI Stocks I Can’t Stop Buying

The AI trade has been quite a rollercoaster ride in 2026. Chipmakers, AI infrastructure companies, and other key players in the AI build-out have soared, repriced, and in some cases, soared again. In other cases, some stocks have been beaten down and haven't quite recovered.

I've been buying two AI stocks in particular, both of which trade for less than they did at the start of 2026. And the reasons they've been beaten down have little to do with their businesses' future potential. Here are the stocks, and why I've been aggressively buying shares of both over the past few months.

The balance sheet everybody is watching

The first stock is Oracle (NYSE:ORCL), which has been absolutely crushing it, business-wise. In the most recent quarter, Oracle's contracted backlog hit an all-time high of $638 billion, with a massive deal with OpenAI, among several other big tech players.

There are two reasons Oracle has been beaten down despite arguably the most impressive new customer wins in the entire technology sector. First, investors are skeptical that customers (especially OpenAI) will be able to fulfill their commitments. Including Oracle, OpenAI has committed to spending $750 billion on computing power and infrastructure through 2030.

Second, Oracle is ramping up its capital spending in order to increase capacity. In fiscal 2026, Oracle's capital spending hit $55.7 billion, compared with $21.2 billion in the previous year. It funded it with about $43 billion in new debt and $5 billion in stock sales (dilution), and it's fair to assume that additional financing will be needed.

The bottom line is that if the expected revenue shows up, Oracle's capex is well worth the cost. If its backlog and realized revenue start to show signs of working out, the stock could be a steal at roughly 18 times forward earnings.

One bad day

IBM (NYSE:IBM) suffered its worst single-day plunge since 1968 in June after it pre-announced a second-quarter earnings miss and CEO Arvind Krishna conceded that the results were far worse than expected. He attributed some of the problems to the global memory shortage, but this also underscores where spending on IBM's services sits on some customers' priority lists.

Despite the disappointing second quarter, there's a lot that is going right for IBM. Its software and consulting businesses (which many consider "legacy") both grew year over year. The company's AI book of business continues to grow rapidly, and IBM recently achieved an important milestone in quantum computing. To be clear, I'm investing in IBM because of a long-term thesis, and the company's early leadership in quantum is a big part of it.

I won't sugar-coat it. IBM's second-quarter numbers were ugly. But it didn't justify a 25% haircut in the stock. The AI tailwinds that have driven sharp growth in bookings in recent quarters remain; it's just that customers' spending priorities have understandably (but temporarily) shifted toward memory chips, servers, and other hardware. Like Oracle, IBM trades for about 18 times forward earnings, and if its issues turn out to indeed be temporary, this could be a great opportunity.

It's also worth noting that both of these are reliable dividend stocks. Oracle has a 1.4% yield at the current price and has raised the payout for 12 consecutive years. IBM yields nearly 3% and has an impressive 31-year streak of increases.

The bottom line is that both of these companies have incredible long-term potential. They're just facing temporary uncertainty right now, and the market is pricing them accordingly. With plans to hold them both for years to come, I've been building positions in these tech giants in my own portfolio.

Matt Frankel, CFP® has positions in International Business Machines and Oracle. The Motley Fool has positions in and recommends International Business Machines and Oracle. The Motley Fool has a disclosure policy.