The Nasdaq has entered correction territory, and just as the so-called "Magnificent Seven" stocks led the market higher during the bull run, these stocks have helped lead the market lower during this recent correction. The "Magnificent Seven" consist of seven leading technology companies: Alphabet (GOOGL -2.15%) (GOOG -2.17%), Amazon (AMZN 0.15%), Apple, Meta Platforms, Microsoft, Nvidia (NVDA 1.46%), and Tesla, all of which trade on the Nasdaq stock exchange.

Let's take a look at the three best "Magnificent Seven" stocks to buy on this dip.

Nvidia

Chip giant Nvidia is the king of artificial intelligence (AI), as its graphics processing units (GPUs) have become the backbone of AI infrastructure. GPUs were originally designed to speed up graphics rendering in video games, but Nvidia later created a software platform to allow them to be programmed for other tasks.

Their high-speed processing power is ideal for high-performance computing (HPC) and AI, and Nvidia's CUDA parallel computing platform in turn helped create a wide moat for the company as it wasn't until about 10 years later that rival Advanced Micro Devices developed its own software platform. By that time, developers had been trained on CUDA, and Nvidia has since expanded its software dominance through CUDA X, a collection of microservices and libraries built specifically for AI and HPC.

As such, Nvidia continues to be the biggest beneficiary from increasing AI infrastructure spending. The big cloud computing companies continue to build out AI data centers to keep up with demand, while AI start-ups and established tech companies race to train the best AI models. AI infrastructure spending continues to be on the rise, with the big three cloud computing companies set to spend over $250 billion in AI-related capital expenditures (capex) this year.

Despite the growth opportunities ahead of it, Nvidia stock is attractively trading at a forward price-to-earnings (P/E) ratio of below 24 times 2025 analyst estimates and a price/earnings-to-growth (PEG) ratio of under 0.5, with PEG ratios of below 1 considered undervalued.

Image source: Getty Images.

Amazon

While known as the leading e-commerce company in the world, Amazon's largest business by profitability is its cloud computing unit, Amazon Web Services (AWS). The company created the infrastructure-as-a-service model and today it operates the largest cloud computing business in the world.

AWS is also Amazon's fastest-growing segment, with its revenue climbing 19% last quarter. The company is benefiting from customers developing their own AI models and applications on its platform through the help of its Bedrock and SageMaker services.

With Bedrock, customers can choose a number of AI models from both Amazon and other companies to customize, while with SageMaker they can train and move these models into production. Amazon has been capacity-constrained and plans to spend $100 billion on AI infrastructure this year to keep up with demand. The company has also developed its own customer AI chip after licensing some technology from Marvell, which when used in conjunction with GPUs helps give it a cost advantage.

Meanwhile, its e-commerce business continues to hum along, with the company using AI to help reduce costs, make it easier for third parties to list items on its site, and help buyers more easily find products. Its higher-margin sponsored ad business is also growing nicely.

Amazon has a history of spending big to win big and it's no exception with AI. The stock, meanwhile, is trading at one of its lowest valuation in years at a 31 forward P/E.

Alphabet

Like Amazon, Alphabet is one of the big three cloud computing companies through its Google Cloud unit. Cloud computing is a high-fixed-cost business, and Google Cloud has recently reached a profitability inflection point now that the business has reached scale. This could be seen in its Q4 results, where Google Cloud revenue jumped 30%, while operating income soared 142%.

Similar to AWS, Google Cloud is also benefiting from customers building out their own AI models and applications, and it too has developed a custom AI chip that it says will, when used alongside GPU, help improve inference times and reduce costs.

At the same time, Alphabet is a digital advertising juggernaut. Google search is the leading digital advertising platform in the world by revenue, while Alphabet's YouTube streaming platform is the most watched video platform and the world's fourth-largest digital advertising platform. Meanwhile, the company has a big opportunity with AI, which it is using to help improve its search results while also offering "AI overviews" to people using its search engine to find information.

With the company historically only serving ads to 20% of search queries, it has an opportunity to create new ad formats to profit from its AI overviews.

In addition to these market-leading businesses, Alphabet is also at the forefront of quantum computing and autonomous driving. It will take a long time before either of these two businesses are meaningful profit contributors; however, they have very strong potential over the long term.

Trading at a forward P/E of only 18.5, Alphabet stock is in the bargain bin.