1 Beaten-Down AI Stock to Buy and 1 to Avoid

By Prosper Junior Bakiny – Apr 1, 2026 at 7:45AM ESTKey PointsAlphabet is already a leader in AI and boasts attractive growth avenues beyond this industry.Recursion Pharmaceuticals has a long way to go before demonstrating that its approach works. It is increasingly looking like artificial intelligence (AI) isn't just a fad. It is a transformative technology that could introduce paradigm shifts across many sectors and industries. Although some AI companies have already capitalized on the growing interest and massive investments in the industry, we may still be in the early innings of this transformation. In other words, it's still time to invest in AI stocks. But they aren't all created equal. Some look likely to deliver market-beating returns over the long run, while others seem far too risky for all but the most aggressive investors. Let's consider one AI stock in each category. Image source: Getty Images. A wide-moat AI leader When ChatGPT first burst onto the scene, some investors thought it would significantly disrupt Alphabet's (GOOG +4.95%) (GOOGL +5.10%) core search business. The stock fell sharply as a result, but Alphabet ultimately used AI to improve its business, including its famous search engine. The company added an AI mode and AI overviews, boosting search traffic and engagement. Alphabet's financial results remain strong, but the stock is down 13% this year. That's likely because of broader market volatility combined with the company's heavy AI-related investments, which some fear will not yield the results it expects. ExpandNASDAQ: GOOGLAlphabetToday's Change(5.10%) $13.95Current Price$287.45Key Data PointsMarket Cap$3.5TDay's Range$277.09 - $288.0852wk Range$140.53 - $349.00Volume9.9KAvg Vol34MGross Margin59.68%Dividend Yield0.29% However, Alphabet's spending is helping the company establish a strong position and avoid being left behind by its similarly sized peers. Implementing AI across its business -- as it has done, including through AI services it offers to the cloud and via subscriptions for Gemini -- could help boost sales and profits even more. And the company has the option to cut costs, as it did a few years ago, if things don't go quite as planned. Alphabet may be moving in the wrong direction this year, at least so far, but the company's multiple growth avenues (even beyond AI) and strong competitive advantage thanks to its brand name and switching costs make it a top stock to buy and hold. Can this company revolutionize the biotech industry? Recursion Pharmaceuticals (RXRX +8.10%) is a biotech focused on accelerating the development of drugs. It normally takes years, sometimes over a decade, for a single brand-new product to go through various phases of clinical trials and earn approval. It also costs a lot. And those are the ones that make it that far. Most stop in the clinic and never earn marketing authorization. Even modest improvements to the time and costs it takes to develop drugs would benefit everyone. Recursion Pharmaceuticals claims it can do that thanks to an AI-powered operating system that tests compounds and sends only the most promising to clinical trials. ExpandNASDAQ: RXRXRecursion PharmaceuticalsToday's Change(8.10%) $0.23Current Price$3.07Key Data PointsMarket Cap$1.6BDay's Range$2.90 - $3.0752wk Range$2.80 - $7.18Volume288KAvg Vol19MGross Margin-6195.95% That sounds good. Here's the problem: Recursion Pharmaceuticals has yet to launch a single product on the market, and doesn't even have one in phase 3 studies. So, despite the company's ambitious goals, it has yet to prove it can accomplish them. Meanwhile, Recursion Pharmaceuticals, like most clinical-stage biotech, is consistently unprofitable. The stock could deliver strong returns if Recursion makes a breakthrough, but it is very risky right now, and those with average risk tolerance should probably stay away. Read NextMar 31, 2026 •By Daniel SparksIs This the Bottom for Alphabet Stock's Dip in 2026?Mar 31, 2026 •By Matt DiLalloHow to Use AI to Make Money in 2026Mar 31, 2026 •By Rich SmithWhy Alphabet Stock Popped TodayMar 31, 2026 •By Benjamin LockeWho Owns YouTube? Largest Shareholders & Board of DirectorsMar 28, 2026 •By Neil PatelStreaming Wars: 1 Netflix Rival Dominating the IndustryMar 28, 2026 •By Marc Guberti2 Safe Stocks to Buy in Times of UncertaintyAbout the AuthorProsper Junior Bakiny is a contributing Motley Fool healthcare analyst covering biotechnology, pharmaceuticals, and healthcare stocks.

Before The Motley Fool, Prosper wrote about investing topics ranging from stock market news to private equity for various companies. He holds a master’s degree in corporate finance from the University of Maryland Global Campus.TMFPBakinyStocks MentionedAlphabetNASDAQ: GOOG$286.67(+4.95%)+$13.53AlphabetNASDAQ: GOOGL$287.56(+5.14%)+$14.06Recursion PharmaceuticalsNASDAQ: RXRX$3.07(+8.10%)+$0.23*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.