September syndrome is already visible in U.S. stock markets. Historically, September is the worst-performing month for Wall Street. This year, too, the situation remains challenging. In the first four trading days of this month, the three major indexes — the Dow, the S&P 500 and the Nasdaq Composite — tumbled 2.9%, 4.2% and 5.8%, respectively.  

The extremely overvalued artificial intelligence stocks suffered the maximum brunt of a recent stock market meltdown. Despite the recent mayhem, the AI frenzy remains intact. So far, no negative news appears for the generative AI ecosystem. Therefore, this meltdown provides a lucrative opportunity to enter AI-centric stocks on the dip for near-term gains.

Three such stocks are: Taiwan Semiconductor Manufacturing Company Ltd. (NYSE: TSM), Micron Technology Inc. (NASDAQ: MU) and NetApp Inc. (NASDAQ: NTAP). All three stocks currently carry a Zacks Rank #2 (Buy).

Is Recession Nearby or a Knee-Jerk Expression? 

Theoretically a recession means contraction of GDP (negative GDP growth rate) for two consecutive quarters. The U.S. GDP grew at 1.4% in first-quarter 2024. The second reading of second-quarter GDP was 3%. On Sept 4, the Atlanta Fed GDPNow projected a 2.1% GDP growth rate for the third quarter. 

Some soft key economic data over a period of time never indicate a nearby recession. In fact, the Fed was eagerly waiting for these weak economic data, especially labor market data, along with a gradually declining inflation rate, in order to initiate a rate-cut regime. 

Finally, the recent AI turmoil is nothing but profit-taking, especially on the part of institutional investors. Stock markets consist of bull and bear operators. As bulls fly high, bears wait quietly for a suitable time and some reasons to be good enough for profit-booking so that they can reenter the market at a reasonably low level. 

So far, this year, buy-on-the-dip remains the best ...