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The market is coming off two superb years, 2023 and 2024, when the S&P 500 climbed over 53% in total, mainly thanks to tech and artificial intelligence (AI) stocks. While 2025 has started off with some turbulence, many strategists still think the market will once again move higher this year and that the tech and AI rally still has legs.
Larger AI stocks, like those in the "Magnificent Seven," carried the market in 2025, but there are many compelling and smaller AI names with bright futures. Two in the electric vehicle (EV) space are electric aircraft company Archer Aviation (NYSE: ACHR) and Chinese EV company Nio (NYSE: NIO). Both stocks have been quite volatile, so investors may want to start small. However, both companies could generate outstanding returns over time:
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Deutsche Bank analyst Edison Yu raised his price target on Archer Aviation from $12 to $15 in December and reiterated his buy rating on the stock. This implies 61% upside from current levels (as of Jan. 10). Meanwhile, the average price target of analysts over the last three months is $11.38, according to TipRanks.
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Citigroup analyst Jeff Chung raised his price target on Nio from $7 to $8.90 at the end of September, which suggests 113% upside from current levels (as of Jan. 10). Meanwhile, the average analyst price target over the last three months is $5.72, according to TipRanks.
1. Archer Aviation: Easing traffic via air taxis
Archer Aviation built an electric aircraft air taxi. The vehicle is designed to perform quick consecutive flights of 20 to 50 miles, carrying a pilot and four other passengers. The vehicle requires minimal charge time and can supposedly fly as fast as 150 miles per hour, reducing traffic-congested trips from hours to minutes. The company is working to set up networks in Los Angeles and San Francisco and with international airports in Chicago and Newark.
Archer has also made significant regulatory progress toward achieving final certification from the Federal Aviation Administration (FAA). For its Midnight vehicle, the company has obtained final airworthiness, FAA Part 135 certification necessary to operate commercial flights, and conducted over 400 test flights ahead of schedule. The FAA also signed off on a final operational rule, providing a framework for regulators to oversee commercial air taxis.
In December, Archer announced a partnership with Anduril Industries to develop an electric aircraft for defense purposes. The two companies first plan to team up on a hybrid-propulsion aircraft potentially for the U.S. Department of Defense. This announcement led Yu to raise his price target to $15. He thinks this could be a multibillion-dollar program generating revenue sooner because military contracts could be granted this year.