Artificial intelligence has dominated the stock market since the beginning of last year. Invesco QQQ Trust ETF (QQQ 1.31%)a popular technology-focused exchange-traded fund (ETF), is arguably one of the best stocks for AI-focused investors. The ETF tracks an index of 100 prominent companies that are listed on the Nasdaqand offers investors instant diversification.

In other words, you don’t have to choose specific AI stocks; instead, buy the Invesco QQQ and wait for the winners to come out on top. The ETF has outperformed the broader market for years.

However, technology stocks recently took a hit, with a sudden spike in market volatility sparking one of the sharpest sell-offs in recent history. While the market has since recovered somewhat, with elections looming and recession fears looming on the horizon, more turmoil could be on the horizon. This is a departure from the relatively smooth ride investors have enjoyed so far.

No, it’s not a good feeling when stock prices fall, but here are two reasons why the recent sell-off is actually a long-term positive.

1. A sell-off can lower valuations

The last 18 months have been remarkable for AI stock investors. The Invesco QQQ is up a whopping 78% since January 2023. A handful of large technology companies, the “Magnificent Seven” stocks, have contributed to these returns, but their share prices are rising faster than the underlying companies are growing. Below you can see that the price-to-sales ratios for this group have risen tremendously since the AI ​​hype began in January 2023:

NVDA PS ratio data by YCharts

These six stocks, NVIDIA, Microsoft, Apple, Amazon, Meta-platformsAnd alphabettogether make up about 40% of Invesco QQQ. They may have helped drive the ETF up, but it can go both ways.

Great companies often command higher valuations, but stocks can become riskier the higher those valuations climb. Crashes can occur when valuations create impossibly high expectations and then something happens to drive investors out. That’s not to say that big tech stocks (and by extension the Invesco QQQ) are at that point, but the sell-off is healthy because it can bring valuations back into balance and reduce those risks.

2. It is ideal for the average cost effect

No matter how much some people try to tell you otherwise, no one can really predict the stock market. Trying to find the right time to buy and sell on the stock market is like playing darts blindfolded.

That’s why dollar-cost averaging is a great investment strategy. Instead of guessing, investors buy stocks slowly and often over longer periods of time. That may mean buying every week, every month, or whenever you think is best for your budget. Sometimes you’ll buy when the price is going up or down, but the goal is to average out somewhere in between. Your investment won’t be at the absolute bottom, but it will prevent you from buying at the worst possible time.

The Invesco QQQ has risen steadily over the past 18 months. Aside from the recent sell-off, the ETF has only fallen 10% or more from its peak once, and that was a short-lived decline in 2023:

QQQ data from YCharts

Those with a dollar-cost averaging strategy have been buying at increasingly higher prices over the past 18 months. A sell-off is an opportunity to snap up cheaper stocks and maybe even lower your cost averaging. An old investing cliche says that the stock market is the only place where people run out of the store when items are on sale. The Invesco QQQ is a top-rated technology ETF that’s a great choice for any AI-focused investor. If you’re investing in a bright AI future, welcome a sell-off with a smile and open arms.