In a new InvestorPlace In his presentation, “The Next Wave of Breakout Stocks,” host Chris Hurt admits he was one of the unlucky ones. He admits he missed out on these breakout stocks, among others:

• Manufacturer of energy drinks Celsius (NASDAQ:CELH), an increase of 1,400%
• AI GPU Superstar NVIDIA (NASDAQ:NVDA), an increase of 1,000 %
• And robotics companies Symbotic (NASDAQ:SYM), which has increased by 400%

You may have missed out on these gains too.

However, there is a good reason why it is so difficult to pick these types of winners: Before their breakthrough, they can look downright ugly.

In 2019, Celsius was a loss-making regional beverage maker without a nationwide distribution network. Nvidia had just lost 50% of its value during the same period due to the cryptocurrency hangover. And in 2022, Symbotic looked more like a failed SPAC than the next AI superstar.

It’s no wonder why Chris and thousands of others wanted to stay far, far away.

Today we are seeing the same thing. Last week, shares of some of the largest AI companies plunged as investors reconsidered their high-priced bets. Companies like chipmaker Intel (INTC) have lost almost 50% in a month, causing some people to compare last week’s volatility to Black Monday of 1987.

The situation is bleak. And it is not clear which stocks to buy when prices fall.

Fortunately, there is a solution. One that has taken years to develop. In his last conversation with InvestorPlace Chief Investment Analyst Luke Lango, Chris reveals how Luke and his team have developed a quantitatively oriented system that is able to cut through the “ugliness” and help them identify those diamonds in the rough before they resurface. It’s called Prometheus, and you can learn more about it in their presentation here.

Even better, many of the system’s top picks are also the same ones our writers at InvestorPlace.com have been eyeing. Together, we’ve found a handful of companies that both man and “machine” believe will recover and potentially become breakout stocks.

NVIDIA (NVDA)

Arguably the biggest source of anger last week came from Nvidia, a company many thought was moving too big and too fast. It took the chipmaker just three months to go from a $2 trillion company to a $3 trillion company earlier this year, making the sell-off appropriately fierce. Last week’s drop has now sent shares down 25% from their July peak — wiping out nearly the same trillion dollars from Nvidia’s market value.

However, both Louis Navellier and Prometheus see an opportunity to buy on the dip. As Louis puts it bluntly, don’t let rumors of “bubble problems” scare you away from Nvidia:

It may be an exaggeration to say that NVDA is in “bubble land.” The GenAI boom took shape in early 2023. Since then, shares have increased more than sevenfold.

However, earnings have increased nearly tenfold during this period. In fiscal 2023, Nvidia’s earnings were 18 cents per share. In the last 12-month period, reported earnings were $1.73 per share.

In other words, Nvidia’s meteoric rise has been accompanied by an even bigger increase in earnings. The company’s shares trade at just 25 times expected 2025 earnings – hardly the stuff bubbles are made of. Earnings forecasts have also continued to rise, with the average analyst adding 3% to earnings per share (EPS) estimates for the last 30 days. This is historically an optimistic sign for further future gains.

Of course, there is a risk that Nvidia will not be able to deliver the expected earnings. Competition among AI chip makers is heating up, while data center companies are under increasing pressure to cut costs. But that’s exactly why the stock fell 25% in the first place. Prometheus rates Nvidia at >90, suggesting a recovery is likely in the next four weeks.

KLA (KLA)

Shares of high-quality UCK (NASDAQ:CLAC) have fallen 20% since July amid similar concerns about demand for AI chips. Investors worried that data centers could reduce demand for semiconductors have sold KLA along with lower-quality companies.

The Silicon Valley company is one of the world’s largest manufacturers of semiconductor wafer manufacturing equipment and specializes in process control, a key service that helps manufacturers inspect chips during research and production.

The complexity of KLA’s equipment and related services gives the company incredible pricing power and scale. It is about four times the size of its nearest competitor and generates gross margins of over 40 percent, according to analysts at Morningstar.

In June, Omor Ibne Ehsan of InvestorPlace.com called KLA a technology pioneer paving the way in AI, 5G and the Internet of Things:

Although the company’s growth has slowed recently, I think the company’s consistent ability to beat Wall Street forecasts bodes well for its future prospects. As the semiconductor industry continues to boom, fueled by insatiable demand for cutting-edge chips, KLAC is poised to thrive. If it maintains its momentum and the Nasdaq rises above 20,000, I wouldn’t be surprised to see the stock catapulted past the $1,000 mark.

The recent sell-off now means Ehsan’s $1,000 price target is nearly 40% above current prices. The company scores a strong 88 on Prometheus and analysts have raised their current year earnings forecasts by 5% over the past 30 days.

Microsoft (MSFT)

Joel Baglole writes this week that a buying opportunity has finally arisen with Microsoft (NASDAQ:MSFT), a company that was sold out on the markets:

Microsoft delivered strong second quarter numbers overall, beating Wall Street’s expectations for revenue and profit. Most analysts raised their forecasts for Microsoft stock after the second quarter results were released…

However, MSFT’s share price has been falling since early July as part of the general decline in technology stocks. Over the past month, Microsoft shares have fallen 13%. This is a great opportunity to buy a top-quality stock on a dip that has a proven track record of rewarding shareholders.

Essentially, Microsoft is catching up in the area of ​​enterprise-oriented cloud computing – an area that Amazon.com (NASDAQ:Amazon) once dominated. Revenue from the Azure cloud service grew 29% in the quarter, well above Amazon’s growth rate of 19%. It’s an increasingly lucrative segment that helped boost Microsoft’s quarterly revenue by $4.5 billion. InvestorPlace.com’s Faisal Humayun also points out that Microsoft’s Azure AI could bring in as much as $200 billion in five years, making it a solid company to buy at this stage.

Prometheus gives Microsoft a strong score of 88.

Symbotic (SYM)

Last month, InvestorPlace.com writer Eddie Pan noted that warehouse automation company Symbotic fell 25% on weak guidance. (Yes, the same company that was previously up 400%.) He explains what’s going on with the AI ​​darling:

Symbotic had trouble with its forecast. The company forecast fourth-quarter revenue between $455 million and $475 million and adjusted EBITDA between $28 million and $32 million. Analysts had expected revenue of $516.84 million, meaning Symbotic’s midpoint revenue missed the target by a whopping 10%.

A closer look reveals that the cuts to the revenue forecast were a direct result of a planned insourcing initiative that will result in revenue losses in the short term and profit increases in the long term. Management realized that outsourcing cost too much and opted for slower, more profitable growth.

That’s why Pan also points out that Wall Street analysts expect the Massachusetts-based company to recover quickly.

The recent sell-off in the stock market now presents a perfect opportunity to get into this high-potential stock. Prometheus Award Shares has a score of 87.8, putting it in the top 2% of large-cap companies.

Intel (INTC)

And finally, our most controversial buy-the-dip recommendation this week is Intel (NASDAQ:INTC), a company I had noticed before, had lost almost 50% of its market value in one month.

The reasons for Intel’s decline are obvious… at least in retrospect:

• Innovation. In 2018, the company failed to deliver its 10-nanometer CPU and has since been catching up with subsequent standards.
• Competition. The performance of the Arm architecture can now compete with that of Intel’s x86 platform. Some believe that this could cause Intel to lose up to 50% of its market share in CPUs.
• Strategy. Intel has lagged behind GPU makers in developing AI-specific chips, making the sector a hot topic for players like Nvidia and Advanced Micro Devices (NASDAQ:AMD).

Worst of all, Intel’s latest products appear to have been rushed to market, with many of the 13th and 14th generation CPUs reportedly causing instability in both desktop PCs and servers.

However, sometimes sell-offs can go too far. As InvestorPlace.com’s David Moadel wrote last week, it’s time to buy Intel stock because no one else wants it:

At this point, there is virtually nothing left for Intel shareholders to fear…

It’s hard to imagine the coming rainbow when it’s stormy. Intel is going through a difficult time, but Intel CEO Pat Gelsinger assured that the above decisions (layoffs, suspension of dividend) were “painful and hard” but necessary…

Unless you truly believe that Intel is heading for bankruptcy, now is the time to show your resilience and buy some shares.

Gelsinger is also putting his words into action. This week, the experienced manager bought 12,500 shares of his company. And he might be on to something. Prometheus gives Intel a rating of 85, which suggests that the sell-off has finally gone too far.

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.

Thomas Yeung is a market analyst and portfolio manager of the Omnia Portfolio, InvestorPlace’s highest-tier subscription plan. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter on investing to make a profit in good times and protect profits in bad times.