Excitement over the hot technology of artificial intelligence (AI) helped the stock market soar last year -- and the movement may be far from over. This is because we're still in the early stages of AI development. Companies have invested in data centers and building AI platforms, but there's much more work to be done there.
Nvidia(NASDAQ: NVDA) chief executive officer Jensen Huang has said about $1 trillion in outdated computers exist and must be updated for accelerated computing. On top of this, the actual use of AI to improve efficiency at businesses or develop new game-changing products is in its early stages. That suggests there's plenty of room for AI-driven revenue growth ahead, meaning 2025 could be another great year for AI stocks. Let's check out my top five to buy at this stage of the AI race.
Image source: Getty Images.
1. Nvidia
I'm mentioning AI chip giant Nvidia for one important reason: Some investors have worried that, after gaining 800% over the past two years, performance may stall. It's impossible to guarantee or predict with 100% certainty that a particular stock will advance during a given time frame. But it's reasonable to be optimistic about Nvidia's potential this year and over time -- for a couple of reasons.
First, Nvidia is the AI chip leader, has built an entire ecosystem of AI products and services, and to ensure its leadership, the company has committed itself to annual innovation. This along with the fact that Nvidia is launching a major new product right now -- the Blackwell architecture -- are positive points for the near term.
Second, we're now heading into a new AI growth phase: The development of agentic AI, or the use of AI to handle complex, multi-step tasks. Nvidia offers developers tools to build these AI agents. So, moving forward, Nvidia should benefit from accompanying its customers all they way along the AI path -- from training models to applying AI in the real world.
2. SoundHound AI
SoundHound AI(NASDAQ: SOUN) specializes in voice AI, and its technology of translating voice directly to meaning -- bypassing the usual text step -- has helped it to stand out. The company has delivered incredible growth in recent times -- for example, in the recent quarter, revenue soared 89%. But much potential lies ahead.
This is because SoundHound is in the early days of tackling a total addressable market of $140 billion. Just a year ago, about 90% of revenue came from automotive customers. In the recent third-quarter report, five industries each contributed 5% to 25% of revenue. This is a positive sign, showing that SoundHound is winning over customers across industries -- and won't depend on just one.
And SoundHound is another company that could benefit from the AI agent boom, offering opportunities for companies in industries such as healthcare, insurance, and travel to gain in efficiency -- for example, managing appointments or bookings or responding to coverage questions.
SoundHound shares have surged over the past year, but the good times may not be over for this potential agentic AI winner.
3. Amazon
If you're looking to invest in AI, but you want to minimize risk, Amazon(NASDAQ: AMZN) may be the perfect choice for you. The company doesn't depend uniquely on AI for its success and has delivered a long track record of growth -- well before AI started picking up momentum.
This is because Amazon is a leader in two high-growth businesses: e-commerce and cloud computing. And these businesses continue to offer the company bright long-term prospects. In addition to this, Amazon also is benefiting from its investment in AI. The company uses AI to improve efficiency in its warehouses, for example, and sells AI products and services through its Amazon Web Services (AWS) cloud business.
And Amazon's investment already has started to bear fruit. Thanks to its AI offerings, AWS has reached a $110 billion annualized revenue run rate. Amazon may not deliver triple-digit share price gains, but this solid, profitable player has what it takes to help investors progressively grow wealth -- and that makes it a great buy now.
4. Meta Platforms
Meta Platforms(NASDAQ: META) is another company that's invested heavily in AI -- but isn't completely dependent on it for revenue. Instead, Meta generates most of its revenue through advertising. Advertisers flock to reach us where they know they'll find us -- using Meta's popular social media apps Facebook, Messenger, WhatsApp, and Instagram.
This has helped the company grow revenue over time into the billions of dollars and even reward shareholders by offering a dividend.
So, where does AI fit in the Meta picture? The company has built its own large language model (LLM), which it's trained to support its own AI assistants and offers as an open-source tool to others. Meta aims to create AI assistants for all of its users, and this could prompt us to spend even more time on the social media apps we already love. Importantly, that could strengthen advertisers' commitments to Meta.
The investment in AI also could help Meta develop other products and services down the road and its commitment to making its LLM available to all developers could set it on the path to becoming an AI leader.
5. Palantir Technologies
Palantir Technologies(NASDAQ: PLTR) had an explosive 2024, reporting its highest profit ever, joining the S&P 500, and seeing its shares surge 340%. But the stock may have farther to go, possibly this year but particularly over the long term.
This is because two growth drivers should help boost revenue well into the future. Palantir helps its customers aggregate their data and make better use of it. In the past, its biggest customer was the government, but these days it's been seeing double-digit growth in commercial customer revenue. And U.S. commercial customers -- totaling only 14 four years ago -- have reached about 300.
Palantir also launched its Artificial Intelligence Platform (AIP) a little more than a year ago, and demand has taken off. So, the commercial customer and AIP could drive significant gains in revenue in the quarters to come, and all of this may translate into more share price gains for Palantir in 2025 and beyond.
Should you invest $1,000 in Nvidia right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, 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 Amazon, Meta Platforms, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
