Thanks to AI, the astonishing rally of U.S. stocks in recent years was driven by the technology sector.
Bloomberg estimates that AI spending will increase from $67 billion in 2023 to $1.3 trillion by 2032.
Nvidia, Broadcom, Qualcomm, Innodata and Marvell Technology stocks stand to gain from the AI investment wave.
Wall Street has witnessed an astonishing bull run in the past 24 months. The major driver of last year’s and this year’s rally has been globally booming artificial intelligence (AI), especially generative AI. Companies that have extensively applied AI in their final products have become multi-baggers in this period.
Despite overvaluation, the technology sector will remain buoyant in the long term supported by its relentless innovative power. No other sector evolves as frequently as technology. The major thrust of the tech sector’s innovative power will come from generative AI technologies.
At this stage, it should be prudent to invest in AI-centric stocks for a long-term perspective (holding period of one year) with a favorable Zacks Rank. Irrespective of their stretched valuation, these stocks will maintain momentum in 2025. Therefore, every 5-10% dip in these stocks will offer a lucrative buying opportunity.
Five such stocks are: NVIDIA Corp. NVDA, Broadcom Inc. AVGO, QUALCOMM Inc. QCOM, Innodata Inc. INOD and Marvell Technology Inc. MRVL.
AI Frenzy Remains Intact
The astonishing rally of U.S. stocks that started at the beginning of 2023 was predominantly driven by the technology sector. An unprecedented adoption of generative AI technology across the world was the prime factor.
Bloomberg Intelligence estimates that generative AI spending will increase from $67 billion in 2023 to $1.3 trillion by 2032. UBS estimated that four U.S. technology giants that are member of the so-called “Magnificent 7” will allocate around $267 billion as capital expenditure on AI applications in 2025, suggesting a jump of 33.5% year over year.
Moreover, on Jan 16, Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) — the largest manufacturer of AI-based chipsets for the world’s best AI chipset developers — reported strong fourth-quarter 2024 earnings results. The company also issued a strong guidance buoyed by excellent AI chip demand.
Strong Growth of AI-Powered Data Centers
AI-powered data centers are the booming industry now. On Jan 7, Microsoft Corp. (MSFT) said that the company will invest $80 billion in 2025 into AI-enabled data centers to train AI models and deploy AI and cloud-based applications.
Data center’s growth is so enormous that giant operators like Microsoft, Alphabet Inc. (GOOGL), Meta Platforms Inc. (META) and Amazon.com inc. (AMZN) have already collaborated with nuclear energy producers in order to mitigate the need of massive electricity for data centers.
A research report by Rystad Energy predicted that the combined expansion of traditional and AI-driven data centers, along with chip foundries, will increase the cumulative demand for U.S. electric power by 177 TWh from 2023 to 2030, reaching a total of 307 TWh.
5 AI-Centric Stocks to Buy for 2025
These five AI-centric stocks have strong growth potential for 2025 and have seen positive earnings estimate revisions over the last 30 days. Each of our picks currently carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past year.
Zacks Investment Research
Image Source: Zacks Investment Research
NVIDIA Corp.
Zacks Rank #2 NVIDIA — the undisputed global leader of the generative artificial intelligence (AI) chipset developer space — has been offering uninterrupted product innovation. At the Consumer Electronics Show 2025, NVDA introduced GeForce RTX 50 Series GPUs, which are powered by its flagship Blackwell architecture. These GPUs provide significant improvements in AI-driven rendering, enhancing gaming and creative workflows.
NVDA targets $1 trillion market opportunity for its GPU’s from the growing AI-powered data centers. NVDA’s major customers have started receiving the next-generation Blackwell AI chips. In fourth-quarter fiscal 2025, NVDA expects to deliver more Blackwell chips than previously estimated.
Huge Short-Term Price Upside Potential for NVDA Stock
NVIDIA has an expected revenue and earnings growth rate of 48.7% and 43.1%, respectively, for next year (ending January 2026). The Zacks Consensus Estimate for next-year earnings has improved 1% over the last seven days.
The average short-term price target of brokerage firms represents an increase of 29.6% from the last closing price of $133.57. The brokerage target price is currently in the range of $135 to $220. This indicates a maximum upside of 64.7% and no downside.
Broadcom Inc.
Zacks Rank #2 Broadcom benefited from strong demand for its custom AI accelerators (XPUs) and networking. AVGO experienced four times growth in AI connectivity revenues, driven by global shipments of its Tomahawk and Jericho solutions. AVGO supplies a wide variety of chips and accessories that are critical components in data center infrastructure.
The acquisition of VMware has benefited the infrastructure software solutions of Broadcom. VMware’s expanding clientele, which includes the likes of Alphabet and Meta Platforms, is noteworthy. AVGO’s strong partner base, including Arista Networks, Dell Technologies, Juniper and Supermicro, has been a key catalyst.
Good Short-Term Price Upside Potential for AVGO Shares
Broadcom has an expected revenue and earnings growth rate of 18.3% and 29.4%, respectively, for the current year (ending October 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.3% in the last seven days.
The average short-term price target of brokerage firms represents an increase of 7.8% from the last closing price of $229.41. The brokerage target price is currently in the range of $175 to $300. This indicates a maximum upside of 30.8% and a downside of 23.7%.
QUALCOMM Inc.
Zacks Rank #2 QUALCOMM formed a strategic collaboration with Google to develop Generative AI digital cockpit solutions. QCOM also recently introduced powerful automotive platforms to bolster the in-vehicle digital experience and facilitate automated driving. These initiatives are driving growth in the automotive business. Strength in the Android smartphone market is a tailwind.
QUALCOMM’s Cloud AI 100 chip can carry out 227 server queries and manage a net of 3.8 queries per watt. In 2024, QCOM unveiled the Snapdragon 8s Gen 3 mobile chip supporting 30 generative models including image generation and voice assistants. QCOM also launched AI-capable Snapdragon X Plus laptop processor, which has faster CPU speed using less power.
Solid Short-Term Price Upside Potential for QCOM Stock
QUALCOMM has an expected revenue and earnings growth rate of 8.3% and 9%, respectively, for the current year (ending September 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.3% in the last 30 days.
The average short-term price target of brokerage firms represents an increase of 24% from the last closing price of $161.43. The brokerage target price is currently in the range of $160 to $270. This indicates a maximum upside of 67.3% and a downside of 0.9%.
Innodata Inc.
Zacks Rank #1 Innodata operates as a global data engineering company through three segments: Digital Data Solutions (DDS), Synodex, and Agility. The DDS segment engages in the provision of AI data preparation services, collecting or creating training data, annotating training data, and training AI algorithms for its customers, as well as AI model deployment and integration services.
DDS also provides a range of data engineering support services, including data transformation, data curation, data hygiene, data consolidation, data extraction, data compliance, and master data management. INOD is focused on supporting Big Tech companies in developing generative AI models.
Robust Short-Term Price Upside Potential for INOD Shares
Innodata has an expected revenue and earnings growth rate of 34.6% and a negative 5.1%, respectively, for 2025. The Zacks Consensus Estimate for 2025 earnings has improved 1.2% over the last 30 days.
The average short-term price target of brokerage firms represents an increase of 27% from the last closing price of $37.09. The brokerage target price is currently in the range of $40 to $54. This indicates a maximum upside of 46% and no downside.
Marvell Technology Inc.
Zacks Rank #1 Marvell Technology is benefiting from the strong demand environment across the data center end market. In the last reported quarter, MRVL’s data center end market revenues increased 98% year over year and 25% sequentially, propelled by strong revenue growth across AI-driven demand for PAM products and ZR electro-optics.
MRVL is a promising player in the solid-state drive controllers’ market. The storage market is seeing a steady increase in demand, given the fast-growing data volume, especially the exponential growth in unstructured data. Completion of inventory digestions is likely to aid growth for MRVL across the enterprise networking and carrier infrastructure end markets.
Strong Short-Term Price Upside Potential for MRVL Stock
Marvell Technology has an expected revenue and earnings growth rate of 40.3% and 72.8%, respectively, for next year (ending January 2026). The Zacks Consensus Estimate for next-year earnings has improved 0.4% in the last 30 days.
The average short-term price target of brokerage firms represents an increase of 9.5% from the last closing price of $117.58. The brokerage target price is currently in the range of $95 to $160. This indicates a maximum upside of 36.1% and a downside of 19.2%.
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