Investing in the Future: Three AI Stocks to Watch

Artificial Intelligence (AI) is emerging as a transformative technology with the potential for significant long-term investment returns. However, successful investing in AI requires strategic choices.

While not every AI stock will deliver substantial profits, several are already making impressive gains and may continue to do so. Let’s explore three AI stocks that investors should consider now.

Looking for the best way to invest $1,000 today? Our team has highlighted the 10 best stocks to buy right now. Learn More »

1. Nvidia

Nvidia (NASDAQ: NVDA) stands at the forefront of AI stock opportunities. The company is a top beneficiary of AI infrastructure spending, as its graphic processing units (GPUs) are essential for training AI models and running their operations. As demand for AI infrastructure rises, Nvidia’s position strengthens.

Major tech players, including Microsoft and OpenAI, are investing heavily in AI development. Microsoft plans to allocate approximately $80 billion toward AI-related capital expenditures by 2025, while Amazon aims for $100 billion, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) expects to invest $75 billion, and Meta Platforms intends to spend up to $65 billion.

With such huge budgets directed toward AI infrastructure, Nvidia is positioned to capture a significant portion of this spending. Although some competitors use custom AI chips, Nvidia maintains a dominant 90% market share in the mass GPU market, thanks to its strong CUDA software platform and superior microservices that outshine those of Advanced Micro Devices.

Currently, Nvidia stock shows promising value, trading at a forward price-to-earnings (P/E) ratio of 25 based on 2025 projections, and a price/earnings-to-growth (PEG) ratio of 0.5, indicating that it may be undervalued.

Image source: Getty Images.

2. Alphabet

Alphabet is another key player in the AI space, primarily through its cloud computing division, Google Cloud. In the fourth quarter, Google Cloud witnessed a remarkable 30% increase in revenue, reaching $12 billion, while its operating income surged by 142% to $2.1 billion.

Growth for Alphabet’s cloud division faces limitations due to capacity issues, prompting the company to increase its capital expenditures to keep pace with demand. Alongside its use of Nvidia GPUs, Alphabet has developed its own tensor processing units (TPUs) with Broadcom to enhance cost efficiency and speed.

Earlier this month, Alphabet launched its Gemini 2.0 AI model for public use and integrated it into its search features. This model can manage complex queries and assist with tasks like coding. As Alphabet historically monetizes ads on just about 20% of its search interactions, its AI advancements could create significant new growth avenues. The company is also pioneering in quantum computing and autonomous vehicle technology, with the Waymo unit currently offering paid robotaxi services in the U.S. The stock remains reasonably priced, trading at a forward P/E of only 18.

3. Salesforce

Salesforce (NYSE: CRM) aims to lead the new frontier of AI with its focus on agentic AI. While generative AI helps users create content through prompts, agentic AI takes it further by performing tasks autonomously with minimal human input. For instance, while generative AI might give a recipe, agentic AI can order the ingredients needed for that meal.

Salesforce has introduced its Agentforce solution to the market, enabling businesses to create specialized AI agents capable of handling various functions, such as customer service. Companies can also customize these agents using low-code and no-code tools. Salesforce’s ambitious projection includes 1 billion AI agents in operation by the end of its fiscal year 2026, and the response from customers has been strong, with over 1,000 deals made just months after launch.

Currently, Salesforce’s stock trades at a forward P/E of under 26, alongside a PEG ratio below 0.6, suggesting an appealing valuation amid its significant growth potential.

Seize This Investment Opportunity

Have you ever felt you missed out on investing in successful stocks? Now is the perfect chance to reconsider your strategy.

On rare occasions, our analysts recommend a “Double Down” stock, identifying companies poised for significant growth. If you’re concerned that you missed your opportunity, act swiftly. The benefits are evident:

• Nvidia: If you had invested $1,000 when we first recommended it in 2009, you’d now hold $348,579!*
• Apple: A $1,000 investment in 2008 would have grown to $46,554!*
• Netflix: A $1,000 investment in 2004 would now be worth $540,990!*

We are currently issuing “Double Down” alerts for three exceptional companies—opportunities like this may not come again soon.

Learn more »

*Stock Advisor returns as of February 21, 2025

Randi Zuckerberg, former director at Facebook and sister of Meta CEO Mark Zuckerberg, serves on The Motley Fool’s board of directors. John Mackey, ex-CEO of Whole Foods, an Amazon subsidiary, is also on the board. Suzanne Frey, a high-ranking executive at Alphabet, is part of The Motley Fool’s board as well. Geoffrey Seiler holds positions in Alphabet and Salesforce. The Motley Fool has interests in and recommends Advanced Micro Devices, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Salesforce, and it also recommends Broadcom. The Motley Fool has its own disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.