If there was a single overarching theme in 2024, it was arguably artificial intelligence (AI). Businesses scrambled to adopt these game-changing algorithms, cloud providers spent billions of dollars to bring their data centers up to snuff, and chipmakers went back to the drawing board, working feverishly to bring their best AI-centric semiconductors to market.
One of the unfortunate by-products of this mad dash was that some investors piled recklessly into any company even remotely related to AI. While some of those bets paid off, others crashed and burned, leaving shareholders holding the bag. There was another unintended consequence: Many AI-related stocks, from star performers to rank imposters, ended up with lofty valuations and little room for upside.
Despite those circumstances, there are still AI stocks that have a long runway ahead. In no particular order, here are three AI growth stocks ready for a bull run in 2025.
Image source: Getty Images.
Advanced Micro Devices
While it's true that Nvidiacornered the market for data center GPUs, this hasn't stopped rival Advanced Micro Devices(NASDAQ: AMD) from developing compelling alternatives to Nvidia's premium-priced processors. In fact, AMD has experienced record demand for its Instinct series AI GPUs and Epyc CPU. "We believe we gained server CPU share in the quarter as enterprise wins accelerated," according to CEO Lisa Su. She went on to say that numerous big-name cloud and AI customers expanded their use of AMD's MI300X AI-centric accelerators.
AMD's recent results help provide context. In the third quarter, AMD's revenue grew 18% year over year to $6.8 billion, while its diluted earnings per share (EPS) surged 161% to $0.47. But that only tells part of the story. The company delivered record data center revenue of $3.5 billion, up 122% year over year and 25% sequentially, thanks to strong and growing demand for its AI-centric data center chips. Weakness in the gaming market was a drag on results as revenue for the segment of $462 million plunged 69%.
So even as Nvidia stock has soared 168% over the past year, AMD shares are down 17%, and therein lies the opportunity. AMD is working to "chip" away at Nvidia's dominance in the data center market, and any progress in that regard could send the stock soaring.
Some on Wall Street seem to agree. Rosenblatt Securities analyst Hans Mosesmann recently named AMD a "Top Stock for 2025," with a buy rating and $250 price target. That represents potential upside of 105% compared to Wednesday's closing price. Coincidentally, the analyst cites the opportunity in the data center GPU market, suggesting the adoption of AMD chips could increase significantly.
It also doesn't hurt that AMD shares are currently selling for 24 times forward earnings, making it a relative bargain.
Broadcom
When it comes to scope in the technology sector, Broadcom(NASDAQ: AVGO) is among the top contenders. The company's stunning collection of semiconductors and infrastructure software solutions reach into every corner of tech, supplying the cable, broadband, mobile, and data center industries. The company boasts that "99% of all internet traffic crosses through some type of Broadcom technology."
Perhaps more importantly, many of Broadcom's products are key components to the operation of data centers, where the majority of AI processing takes place. This makes the company a critical provider to the AI ecosystem.
The surging demand is evident in the company's results. In its fiscal 2024 fourth quarter (ended Nov. 3), Broadcom generated revenue that jumped 51% to $14 billion, while its adjusted EPS climbed 31% to $1.42.
As impressive as these results are, this is likely just the beginning. Management updated its long-term forecast and is guiding for AI revenue in a range of $60 billion to $90 billion by fiscal 2027. That works out to growth of between 391% and 638%, compared to its 2024 revenue of $12.2 billion.
There's even more good news for investors. Several Wall Street analysts recently raised their price targets on Broadcom to $300, which represents potential upside of 31% compared to Wednesday's closing price. Jefferies analyst Blayne Curtis, who maintains a buy rating on the stock, said demand for Application Specific Integrated Circuits (ASICs) is skyrocketing, and Broadcom is "uniquely positioned with AI ASICs rapidly growing in complexity and volumes."
While Broadcom is currently selling for a premium at 36 times forward earnings, the company's track record of performance and growing opportunity illustrated why the stock is deserving of a premium.
Micron
Another unsung hero in the AI playbook is Micron Technology(NASDAQ: MU). The company is one of the world's largest suppliers of memory (DRAM) and storage (NAND) chips, which are vital to the AI processing that occurs in data centers. Last year, the company expanded its offerings, entering the highly competitive high-bandwidth memory market with its HBM3e chip. By all accounts, this was a resounding success.
Early last year, Micron began volume production of the HBM3e after Nvidia announced the chip would be integrated into its H200 Tensor Core GPUs, providing "advanced memory to handle massive amounts of data for generative AI and high-performance computing (HPC) workloads," according to the press release. Micron quickly sold out of its entire supply of HBM3e for 2024, while most of its supply for 2025 was already allocated.
Just this week, Nvidia revealed that Micron's HBM solutions would power its new GeForce RTX 50 Blackwell GPUs -- another key win for the company.
These strategic moves have fueled robust results. For Micron's fiscal 2025 first quarter (ended Nov. 28), it generated record revenue of $8.71 billion, which jumped 84% year over year and 12% sequentially. The results were driven by data center revenue that soared 400% and accounted for 50% of sales. This helped the cyclical chip company swing to a year-over-year profit, with EPS of $1.67. CEO Sanjay Mehrotra said the company is "exceptionally well positioned to leverage AI-driven growth to create substantial value for all stakeholders."
Don't just take my word for it. Rosenblatt Securities analyst Hans Mosesmann is the company's biggest bull, maintaining a buy rating and $250 price target, which suggests potential upside of 151% compared to Wednesday's closing price. The analyst called this "one of the largest memory cycles in history."
Despite its blowout results and unprecedented opportunity, Micron is still attractively priced at just 28 times earnings -- all the more reason the stock is a buy.
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Danny Vena has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
