Key Takeaways
- The AI industry is set to grow into a trillion-dollar industry by 2030
- Every AI stock mentioned is set to capitalize off the industry's future growth
- Each stock's technology serves as key to the expansion of the AI sector's boom
- Challenges like competition and high valuations could test your investment strategy
Introduction
If you're like me, I assume you have been scratching your head wondering how to get a piece of the recent explosive growth being generated by the AI industry, even when the market’s shaky. It’s a puzzle I’ve wrestled with plenty of times during my years of investing.
The truth is, that the AI boom drives insane investor hype with real-world innovation, and sometimes it’s hard to separate the two. With my Wall Street lens, I’ve dug into the numbers, sentiment, and tech breakthroughs to figure out what’s worth your attention.
What are AI stocks?
Yes, you likely have a strong inclining into what AI stocks are, but if you're unaware, AI stocks are shares in companies driving the artificial intelligence revolution, these companies can be providers of AI chips, cloud processing, direct AI modeling, and even REITs.
By 2032, it is projected that the AI market will balloon to a $2.4 trillion industry. Fueled entirely by technology such as machine learning, generative AI, and automation. When you invest in AI stocks, you’re buying into a seismic shift toward the technology that will be powering humanity for years to come.
The list of 10 top AI stocks chosen
Below is my top, AI-heavy, list of stocks that you need to be monitoring right now. If you're looking to gain a piece of the industry, these stocks are the way to go.
- Nvidia (NVDA) - The chip king powering AI’s backbone.
- Microsoft (MSFT) - Software titan doubling down on AI integration.
- Alphabet (GOOGL) - Search giant with deep AI research roots.
- Amazon (AMZN) - Cloud leader fueling AI scalability.
- Palantir (PLTR) - Data analytics wizard for governments and enterprises.
- Tesla (TSLA) - AI-driven innovator in autonomous driving.
- Broadcom (AVGO) - Custom chip maker for AI workloads.
- ASML (ASML) - Lithography leader enabling AI chip production.
- Taiwan Semiconductor (TSM) - Foundry giant behind AI hardware.
- SoundHound AI (SOUN) - Voice recognition upstart with niche potential.
The chip king powering AI’s backbone
Nvidia (NVDA)
You’ve probably heard of Nvidia as the undisputed champ of AI chips, dominating the GPU market that powers everything from ChatGPT to self-driving cars. Their insane growth and cutting-edge tech basically make them the kings of driving AI.
Why Nvidia?
Nvidia’s been on fire throughout the last year, revenue jumped 94% year-over-year, hitting $60 billion. Full-year 2024 saw a 166% stock surge hitting an ATH of $147, dwarfing the S&P 500. Thanks to Nvidia's GPU sales, its overall profit margin grew to $32.97 billion, a 681% increase compared to 2023.
The semiconductor space can be described as the AI engine room, and it’s set to grow at a 12% CAGR through 2030, per Goldman Sachs. Nvidia is at the heart of it, supplying chips to data centers and companies that are training AI models.
However, the company's valuation is sky-high, P/E at 36x, leaving little room for error. Competition from AMD and Intel’s Gaudi chips could reduce Nvidia's market share. However, I believe Nvidia’s lead is solid, but you’d better time your entry right.
Software titan doubling down on AI integration
Microsoft (MSFT)
Microsoft’s a trusted global company, and now they’re weaving AI into every corner of their software empire, from Azure’s cloud to your daily Word docs. With their OpenAI partnership, they’re not just playing the game they’re rewriting the rules for you to cash in on.
Why Microsoft?
Microsoft’s fiscal 2024 revenue grew 15% to $245 billion, with cloud and AI driving the company's overall gains. Microsoft's stock is also up by over 20% compared to last year, not Nvidia-level, but steady as a rock, in addition, the company's EPS hit $11.80, beating previous estimates.
According to PwC, the cloud computing market is pegged to grow to over $1.2 trillion by 2030 and the AI revolution is the key driver. Microsoft’s Azure is currently neck-and-neck with AWS, and with Microsoft driving AI integration overall industry is progressing upward.
Their OpenAI partnership (hello, ChatGPT!) embeds AI across Office, Azure, and more. It’s incredibly seamless and it's like you’re using AI without even noticing it. On the other hand, Azure's growth slowed slightly due to capacity constraints. Plus, Amazon and Google are strong competitors who could eat away at Microsoft's market share.
Search giant with deep AI research roots
Alphabet (GOOGL)
You know Alphabet as Google’s parent, but they are a company with hands in many pies, especially in the AI industry. Alphabet is diving deep into research with DeepMind and self-driving with Waymo. They’re a slow-and-steady pick that could surprise you with massive upside if you’re patient.
Why Alphabet?
Alphabet’s 2024 revenue climbed 14% to $328 billion, with cloud up 35%, per Morningstar. Stock gained 25%, not bad for a $2 trillion behemoth. Net margins sit at 26%, which is a solid number. Alphabet’s DeepMind and Waymo bets could redefine entire sectors, think healthcare and self-driving cars, positioning the company well for future growth.
DeepMind’s AI research is unmatched and Google Cloud’s AI tools are catching up fast. It’s a slow burn with a massive upside, especially from a historically innovative company. As an investor, looking to cashout on potential future technology, Alphabet might be a good choice.
Cloud leader fueling AI scalability
Amazon (AMZN)
Amazon’s AWS is the cloud beast you rely on, and it’s fueling AI’s explosive growth with tools that let businesses scale like never before. Pair that with their logistics AI smarts, and you have a potentially promising long-term growing stock.
Why Amazon?
Amazon’s 2024 revenue rose 11% to $617 billion, with AWS alone up 19%. The stock is up overall by about 30%, reflecting strong market support for their AI-driven cloud services. Operating margins hit an 86% increase to $68.5 billion compared to 2023.
Cloud computing is the backbone of AI, and AWS is dominating the market with a 31% market share. AWS’s AI services, like SageMaker, let businesses scale fast, a key selling point in growing the company's sales.
However, similar to Microsoft, the competitive landscape is very fierce, creating potential threats to AWS's industry from companies such as Google and Microsoft.
Data analytics wizard for governments and enterprises
Palantir (PLTR)
Palantir has quickly become a popular stock, driven largely by overall market speculation of the stock backed by its expertise in developing unique AI systems for governments and businesses. Their high-stakes contracts and wild stock swings make them a thrilling, if risky, bet for your portfolio.
Why Palantir?
Palantir’s 2024 revenue grew 27% to $2.8 billion. The stock soared 80% after a 27% dip from its peak, leading it to be volatile, but backed by strong fundamentals and future outlook. Net income flipped positive at $300 million a 200% increase compared to 2023.
Palantir’s government and enterprise clients signal long-term contracts, and an overall steady income stream. The company is also closely aligned with the Trump administration, and has seen sharp stock growth since Trump took office, indicating a promising future for Palantir overall.
However, the company's high P/E ratio (200x) is leading to a high amount of speculation, and could see high volatility if the markets see any disruption, or if sentiment drops. For this one, you're better off keeping a close eye on the market's mood before jumping in.
AI-driven innovator in autonomous driving
Tesla (TSLA)
If there was a vote tomorrow, Tesla will likely turn out to be the most hated stock at this moment, driven largerly by CEO Elon Musk's comments and the disruption he's causing through the DOGE. Although there's a lot of negative sentiment, Tesla is still a top AI stock pick for numerous reasons.
Why Tesla?
Tesla’s 2024 revenue dipped slightly, Q1 hit $21.3 billion vs. $25.2 billion Q4 2023, per ARC Group. However, as of writing this, Tesla's stock has plummeted by over 40% within a short period of time. But, the company maintains a revenue of over $97 billion and profit margins of $17.4 billion, Tesla's fundamentals are looking strong to support its stock price.
Autonomous vehicles and EVs are expected to grow to a $1 trillion+ market by 2030, positioning Tesla well to gain from this market growth. Tesla’s Full Self-Driving (FSD) and Optimus robots are pushing the AI boundaries, making the company very attractive for long-term investors.
Current growth is bumpy, but the ceiling for Tesla is sky-high. From AI-driven robotics, to clean energy ecosystems, you're not only investing in a car company with Tesla, you're investing in the future of humanity instead.
Custom chip maker for AI workloads
Broadcom (AVGO)
Broadcom is not as flashy as companies such as Nvidia, but their customized AI chips are intricate components for data centers such as Google's and Meta's. They're slow climbers that have experienced their own stock surges and fundamental growth.
Why Broadcom?
Broadcom’s AI revenue surged in 2024, with its overall stock up 50% largely driven by the increased demand for its AI infrastructure. Total revenue grew 12% to $51.5 billion, compared to 2023. It’s not Nvidia’s pace, but it’s been steadily climbing, seeing strong growth across all its sectors.
With the AI industry set to continue a growth trajectory to $1.8 trillion by 2030, Broadcom's ASICs power AI data centers servicing Fortune 500 companies such as Alphabet and Meta, is set to capitalize off this future industry's gains.
On the other hand, the landscape has become more competitive, with companies trying to reach the nobility of Nvidia, Broadcom may stay within the shadow of Nvidia for its GPUs creating a potential slowdown in its sales/revenue.
Lithography Leader Enabling AI Chip Production
ASML (ASML)
ASML, is a company that makes machines that craft the world's most advanced AI chips for companies such as Nvidia and TSMC. They have a complete monopoly over the industry driven by their EUV technology.
Why ASML?
While ASML saw its revenue increase by 12% throughout 2024 reaching $28.26 billion, the company's overall stock fell by about 5%. This was driven by the export ban China placed on ASML, although 50% of sales was generated from China.
With the EUV machine industry expected to grow to $31.26 billion and the overall semiconductor industry expected to grow to $1 trillion by 2030, ASML is top of the list and positioned to profit from this future growth potential. ASML has a monopoly over EUV lithography and companies such as TSMC.
However, this growth is not going to be immediate, and with the ban placed by China, ASML could see a large decrease in it 2025 sales, leading to a potential short-term sell-off of its stock. But, with future growth potential, it might be worth holding on to, or waiting, for when investing in ASML.
Foundry Giant Behind AI Hardware
Taiwan Semiconductor (TSM)
Likely the most spoken about company in modern times, TSMC is the world's supplier of semiconductors and has been designated the 'foundry king'. The sheer scale and production of cutting-edge 3nm chips places TSMC at the pinnacle of its industry.
Why TSMC?
TSMC saw its stock skyrocket through 2024, going from $99 to $208 by year's end, an increase of 109%. Further driven by an increase in its operating profit from $27.9 billion to $40 billion compared to 2023.
With the ever-expanding industry, about to grow to well over $1 trillion, TSMC is the world's foundry for tiny 3nm AI-ready chips, making them a highly valuable company driving the AI revolution. Furthermore, TSMC is poising itself for the future, with the announcement of its $100 billion investment into the development of foundries across America.
It certainly looks bright for TSMC, but there are looming geopolitical risks associated with the company, with a potential conflict within the Taiwan strait, TSMC will be affected, and this will likely be reflected in its stock price, in the event, it might be wise to mitigate your portfolio's risk by selling off TSMC stock.
Voice Recognition Upstart with Niche Potential
SoundHound AI (SOUN)
SoundHound AI’s the scrappy underdog you might overlook, but their voice recognition tech is popping up in cars and fast-food joints everywhere. It’s a high-risk, high-reward play that could turn your small bet into something big if they hit the jackpot.
Why SoundHound?
Although the company is not in a strong position when it comes to its operating profits, currently at -$340 million, down by $272 million compared to 2023, but SoundHound has seen a revenue growth of 84% to $84.69 million compared to the previous year.
As one of the leaders in voice AI, SoundHound is set to capitalize off the industry with estimates that sound AI will become a $20.4 billion market by 2030. The company's unique technology, able to interpret complex speech patterns, can be considered best-in-industry, further fueling speculation of massive future returns.
However, the company is seeing substantially poor financials and this stands as a major concern among investors, further reflected in its recent stock plummeting from an ATH of $24 to today's value of $9 driven by the dumping of its shares by Nvidia, leading to many speculating SoundHound may not have as bright a future as investors originally thought.
Conclusion
That is quite the list, and will take time to digest, but each of these stocks contributes a significant amount to the AI industry as a whole, from key components and infrastructure, to direct-to-consumer AI solutions.
Investing for the future is why we analyze AI stocks, and this revolution is showing no signs of slowing down. If you're looking to do a deeper dive into stock analysis, I highly recommend you try Intellectia's AI, the world's most powerful financial analysis tool out there.
Frequently Asked Questions
Are AI stocks overhyped?
Well, it depends on which stocks you're researching, for example, key infrastructure and component AI stocks can support their valuations based on their fundamentals, whereas other AI stocks are driven purely by speculation. So, the answer is yes and no.
What’s the best AI sector for 2025?
Key infrastructure is likely the way to go, this will be your TSMCs, your Broadcoms, etc.. The reason is, that infrastructure is needed right now, so for short-term growth we are likely going to see more AI infrastructure projects.
Should I wait for a dip?
This is tough. Firstly, no one really knows how low a dip could be. If anything, it would be best if you took an emotionless approach to the market, and instead invested in the long term. Historically, markets rebound and grow the longer you wait, problem is, this could be years.
