Investors Eye Major Growth Opportunities in AI Technology

An updated edition of the February 14, 2025 article.

Artificial Intelligence (AI) is transforming industries by enabling machines to process vast amounts of data, recognize patterns, and make autonomous decisions. This technology is revolutionizing sectors such as robotics, healthcare, finance, cybersecurity, and e-commerce through machine learning, deep learning, and natural language processing. The rise of multimodal learning and increasing context awareness further drives AI’s proliferation. The development of Generative AI (Gen AI) and Agentic AI has positioned AI as a crucial factor in enhancing efficiency, automation, and innovation.

With sophisticated agents capable of reasoning and learning from customer interactions, Agentic AI is changing the game. Companies like Alphabet GOOGL are integrating AI into their search capabilities. Gen AI is improving how businesses and government agencies search large datasets using semantic search, automated metadata tools, and advanced document transcription. Enhanced security is another significant benefit, as AI automates threat detection, analyzes extensive data, and provides rapid incident responses, which is advantageous for cybersecurity firms like Okta OKTA.

As AI adoption accelerates, global investment in AI infrastructure is expected to surge. Major U.S. technology companies, including Microsoft MSFT, Amazon AMZN, International Business Machines IBM, Google, and Meta Platforms META, lead the way in innovation. These firms are backed by powerful AI chips from NVIDIA NVDA. For instance, META plans to allocate between $60 billion and $65 billion for AI capital expenditures in 2025. Additionally, OpenAI, SoftBank, and Oracle, in collaboration with the Trump administration, have announced the Stargate venture, targeting a $500 billion investment in new AI infrastructure over the next four years.

Given the swift advancement of AI technology and substantial investments in development, there are considerable growth prospects for investors. Our Artificial Intelligence Screen is a valuable tool for pinpointing AI stocks with massive growth potential.

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Top AI Stocks to Consider for Investment

Meta Platforms is actively leveraging AI to boost user engagement, which has been a major growth driver. With over 3.35 billion daily users, META possesses vast amounts of data critical for AI development. As a Zacks Rank #2 (Buy) company, META stands out as a crucial player in the digital advertisement space alongside Alphabet. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

With Meta AI now reaching over 700 million monthly active users, the company’s effort to provide personalized updates is expected to enhance user engagement further. Meta has also expanded AI’s multilingual support to six European languages. The company’s significant capital expenditure projected at $60 billion to $65 billion underscores its commitment to AI infrastructure. (Read More: META Starts Testing Community Notes: Should You Taste the Stock?)

In addition, higher advertising revenues have positively influenced META’s growth. The company utilizes its proprietary machine learning system, Andromeda, to optimize ad recommendations. Andromeda, powered by NVIDIA’s Grace Hopper Superchip and Meta Training and Inference Accelerator hardware, enhances personalized advertisements for its viewers.

On the other hand, IBM is witnessing robust demand for its hybrid cloud and AI offerings. This Zacks Rank #2 company is enjoying rapid growth in its Gen AI segment, including watsonx. IBM provides flexible AI solutions for all customers using both their models and open models from platforms such as Hugging Face, Meta, and Mistral. (Read More: IBM Soars 32% in the Past Year: Should the Stock Be in Your Portfolio?)

IBM has cultivated a Gen AI business exceeding $5 billion, increasing by approximately $2 billion quarter over quarter. Software accounts for about one-fifth of this business, with the rest coming from consulting. The company focuses on cost-effective Granite models tailored for specific applications. Products like RHEL AI and OpenShift AI provide IBM clients a steady and scalable AI infrastructure based on open-source technology. In terms of infrastructure, the Telum II processor enhances AI capabilities for IBM Z.

The expansion of IBM’s partnership base, which includes notable companies like AMD, Palo Alto Networks, SAP, Amazon, Microsoft, and CoreWeave, serves as a significant growth catalyst.

Meanwhile, Okta also stands out as a Zacks Rank #2 company benefiting from its innovative offerings. The company’s suite of AI capabilities known as Okta AI is integrated across its products, helping organizations leverage AI to enhance user experiences and bolster cybersecurity. Both the Okta Platform and Auth0 Platform are designed to be compatible with public clouds, on-premises infrastructure, and hybrid setups. (Read More: Does OKTA’s Strong Portfolio Make it the Best Security Stock to Buy?)

As of the fourth quarter of fiscal 2025, OKTA reported 19,650 customers. The number of customers generating over $100,000 in Annual Contract Value (ACV) grew by 7% year-over-year, reaching 4,800. Additionally, the company added 25 clients with more than $1 million ACV during the quarter. Okta Identity Governance has gained traction with over 1,300 customers and $100 million in ACV.

A strong partner ecosystem, including Amazon Web Services (AWS), CrowdStrike, Google, and Microsoft, further supports Okta’s growth. In the fourth quarter of fiscal 2025, OKTA achieved over $1 billion in aggregate Total Contract Value (TCV) through its partnership with AWS, with revenues from the AWS marketplace increasing more than 80% in fiscal 2025.

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This standout company targets millennial and Gen Z consumers and generated nearly $1 billion in revenue last quarter. Recent market adjustments present an excellent opportunity for investment. While not all elite selections yield success, this stock could greatly exceed past Zacks recommendations, such as Nano-X Imaging which rose by 129.6% in just over nine months.

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Amazon.com, Inc. (AMZN): Free Stock Analysis report.

Microsoft Corporation (MSFT): Free Stock Analysis report.

International Business Machines Corporation (IBM): Free Stock Analysis report.

NVIDIA Corporation (NVDA): Free Stock Analysis report.

Alphabet Inc. (GOOGL): Free Stock Analysis report.

Okta, Inc. (OKTA): Free Stock Analysis report.

Meta Platforms, Inc. (META): Free Stock Analysis report.

This article originally published on Zacks Investment Research (zacks.com).

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