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Artificial intelligence (AI) was a market-driving theme last year, with AI stocks helping the S&P 500, the Nasdaq, and the Dow Jones Industrial Average each soar in the double digits. Companies selling AI tools and services saw earnings climb -- and investors piled into these players. The initial wave of AI growth was all about this building out of infrastructure and the training of models to solve tomorrow's complex problems.
Now, in the early days of 2025, there's reason to be optimistic about another great year for AI as the infrastructure buildout continues. Nvidia(NASDAQ: NVDA) CEO Jensen Huang has said about $1 trillion of computers worldwide must be upgraded for accelerated computing, and that doesn't happen overnight. On top of this, 2025 may be the year of agentic AI, or the AI agents that can reason, develop a solution for a problem, and apply it. This and other real-world applications could be transformative for companies and industries.
The great news is, you don't have to invest a fortune in 2025 to potentially win in this top growth area. Here are the best AI stocks in which to invest about $500 this year.
Image source: Getty Images.
1. Nvidia
Nvidia has been the star of the AI market so far -- and it's well positioned to keep that success going. The company is present in every stage of AI development, from the chips to power the training of models to the software to apply AI to the needs of businesses and organizations around the world.
As a result, Nvidia's double-digit and triple-digit revenue growth probably has much further to go. To make the story even brighter, the AI leader is solidly committed to innovation, promising to update its graphics processing units (GPUs) on an annual basis. This should make it very difficult for rivals to beat Nvidia -- by the time they catch up, Nvidia already is launching a new product.
Speaking of new products, the company is in the middle of an important launch right now. Its Blackwell architecture has seen "staggering" demand, according to the company, and will bring in billions of dollars in revenue in its first months of commercialization. So Nvidia stock could be heading for another eye-popping gain in 2025.
2. Alphabet
Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) is the least expensive of the "Magnificent Seven" technology stocks that have driven market gains in recent times. The stock trades for 21x forward earnings estimates, a bargain considering its long track record of earnings growth and solid future prospects.
You probably know Alphabet best through its Google Search, the most used internet search platform worldwide. Advertising across Google equals billions of dollars in revenue for Alphabet every quarter.
But Alphabet also is building strengths in AI, which is helping another source of revenue -- Google Cloud -- to quickly grow. Recently, Google Cloud passed the milestone of $10 billion in quarterly revenue and $1 billion in quarterly operating income.
The service sells AI tools to customers, supported by its own large language model (LLM) Gemini. Alphabet also is using AI to make Google Search even better and help advertisers reach the best audience for their products. All of this could equal a big win for Alphabet -- and its investors -- in the AI boom.
3. Amazon
Amazon (NASDAQ: AMZN), like Alphabet, is benefiting from AI in two ways. The e-commerce giant is a user of AI to improve its operations and sells AI products and services through its cloud computing business, Amazon Web Services (AWS).
As you probably know, Amazon is a giant in e-commerce -- and the company's investment in AI could help this billion-dollar business generate even more profit over time. Amazon is applying AI tools to make its fulfillment process more efficient -- for example, by designing the best delivery route to save time and money.
AWS already has demonstrated success in AI, reaching a $110 annualized revenue run rate last year. AWS is focusing on every "layer" of AI -- from offering customers a wide range of chips to power their projects to a fully managed service featuring LLMs to customize. Amazon also is present in the area of apps and recently launched Project Amelia, an AI agent for sellers on its e-commerce platform.
Amazon is set to benefit from the next wave of AI growth, making it an ideal bet for 2025.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Nvidia:if you invested $1,000 when we doubled down in 2009,you’d have $353,272!*
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $45,049!*
Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $457,459!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Nvidia. The Motley Fool has a disclosure policy.
