Here Are My Top 4 Must-Own Stocks for February

Each month, I look at my holdings and determine which stocks are my best. I do this in case some of them go on sale, as some of the biggest artificial intelligence (AI) companies have right now. That way, I'm prepared when the market drops to take action instead of needing to analyze.

My top four must-own stocks for February are mostly centered on the AI field, but there's also a commerce company that looks incredibly cheap despite its impressive growth.

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AI hardware providers: Taiwan Semiconductor Manufacturing and Nvidia

DeepSeek sent shockwaves through the investing world when it announced it trained its AI model that was competitive with ChatGPT and others for under $6 million. However, this figure doesn't include any pre-training or hardware involved. Still, this didn't stop the market from selling off Taiwan Semiconductor Manufacturing (NYSE: TSM) and Nvidia (NASDAQ: NVDA), two of the biggest beneficiaries of the massive AI buildout spending spree.

Many assume that we'll need less computing power now that more efficient models are available, but that's the wrong assumption. U.S. companies are still indicating they will spend a boatload of money on this trend, and these decisions haven't changed since DeepSeek's announcement. Additionally, there's the Jevons paradox, which states that as a resource becomes more efficient, consumers use more of it because the price has come down.

This means that Nvidia and Taiwan Semi will be fine over the long term, and this short-term dip should be viewed as a buying opportunity. Taiwan Semi and Nvidia now trade for extremely attractive prices from a forward price-to-earnings perspective.

TSM PE Ratio (Forward) data by YCharts

Considering the broader market as measured by the S&P 500 trades for 22.3 times forward earnings, I'd say these two stocks look like an incredible value, especially with the strong growth they're expected to put up. As a result, they look like great buys now.

AI and advertising: Meta Platforms

Meta Platforms (NASDAQ: META) is a much stronger business than it gets credit for. It has an absolute cash cow in its advertising business, as it owns some of the world's most popular social media sites (Facebook, Instagram, Threads, WhatsApp, and Messenger). In Q4 alone, advertising revenue from these platforms generated $46.8 billion in revenue, up 21% year over year.

This segment is also incredibly profitable, as its Family of Apps division delivered a 60% operating margin in Q4. That level of profitability is nearly unheard of and convinces me that Meta is one of the best businesses out there.

However, Meta is taking a chunk of those profits and heavily investing in artificial intelligence, virtual reality (VR), and augmented reality (AR) products. While these investments haven't paid off yet, they could produce another massive revenue stream if one of them becomes a hit.

Regardless, the base business is attractive as is, and with the stock trading for 28 times forward earnings, it makes sense to buy at these levels.

Commerce: MercadoLibre

MercadoLibre (NASDAQ: MELI) may be unknown to some investors, but it's the most dominant e-commerce platform in Latin America. Alongside its massive e-commerce network, it also has a booming fintech platform and is often compared to PayPal and Amazon, making it an incredibly strong business.

Currently, MercadoLibre is dealing with losses in its credit division that are depressing its profits. However, this is a temporary headwind and will eventually be flushed out.

MercadoLibre's revenue is still rapidly growing, rising 35% year over year. The stock looks incredibly cheap for its growth, trading for a mere 16 times free cash flow.

MELI Price to Free Cash Flow data by YCharts

For the growth that MercadoLibre delivers and its market dominance, the stock's price is a no-brainer, and investors should be loading up on this long-term winner any chance they get.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Amazon, MercadoLibre, Nvidia, PayPal, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Amazon, MercadoLibre, Meta Platforms, Nvidia, PayPal, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2025 $85 calls on PayPal. The Motley Fool has a disclosure policy.