2025 Begins with Market Volatility, But AI Stocks Shine Bright
Wall Street kicked off 2025 with some bumps, following a turbulent end to December. In contrast, tech stocks, a major driver of last year’s market rise, are showing signs of recovery. The Nasdaq has experienced successive gains, primarily fueled by a surge in semiconductor stocks.
In the past two years, semiconductor companies have gained attention due to the growing excitement surrounding artificial intelligence (AI), particularly generative AI, led by NVIDIA Corporation NVDA. Analysts predict that the race for AI technologies will heat up soon, driven by increasing demand across multiple sectors.
With these trends in mind, investing in AI-focused stocks could be a wise move for 2025. Four key stocks to consider are Broadcom Inc. AVGO, NVIDIA Corporation, AudioEye, Inc. AEYE, and Five9, Inc. FIVN. These companies hold a Zacks Rank of #1 (Strong Buy) or #2 (Buy) and are predicted to perform well. For a complete list of today’s Zacks #1 Rank stocks, check here.
Tech Firms Increasing AI Investments
A growing number of tech companies, regardless of size, are dedicating significant resources to AI. Firms that have embedded AI into their products have seen notable growth during this time.
On Friday, Microsoft Corporation MSFT announced a plan to invest $80 billion in AI-enabled data centers during fiscal 2025 to support AI workloads. This fiscal year concludes in June.
Moreover, Microsoft is not alone in its significant AI investments. Many tech giants are pouring billions into NVIDIA’s graphic processing units to build and operate AI models. This trend has resulted in stock prices for companies incorporating AI into their products soaring by 300-400% in recent years.
The AI Wave Keeps Rising
The rapid adoption of OpenAI’s ChatGPT, launched in 2022, ignited competition among businesses striving to create their own generative AI solutions. Microsoft, having invested more than $13 billion in OpenAI, provides cloud infrastructure for the startup and has incorporated its technology into products such as Windows and Teams.
According to Bloomberg Intelligence, spending on generative AI is set to leap from $67 billion in 2023 to $1.3 trillion by 2032. Another report from UBS forecasts that the four major U.S. tech companies within the “Magnificent 7” will invest approximately $267 billion in AI applications as capital expenditures in 2025, marking a 33.5% increase from the previous year.
4 AI Stocks with Promising Growth
Broadcom
Broadcom Inc. is a leading designer, developer, and supplier of a wide variety of semiconductor devices, particularly focusing on complex digital and analog products. Broadcom is steadily making gains in the AI chip market, with its Ethernet AI solutions experiencing a remarkable 400% year-over-year growth, and its Accelerators segment increasing by 350%.
This year, Broadcom’s expected earnings growth rate stands at 29.4%. The Zacks Consensus Estimate for current-year earnings has risen by 2.9% over the last 60 days, earning it a Zacks Rank of #2.
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NVIDIA Corporation
NVIDIA Corporation has emerged as a standout performer in the semiconductor sector, enjoying remarkable success in 2023. As a principal designer of graphic processing units (GPUs), NVDA stock often benefits from a thriving cryptocurrency market, given GPUs’ essential roles in data centers, artificial intelligence, and cryptocurrency mining.
NVIDIA’s anticipated earnings growth rate for the current year exceeds 100%. The Zacks Consensus Estimate for current-year earnings has improved by 4.3% in the last 60 days, leading to a Zacks Rank of #2.
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AudioEye
AudioEye, Inc. specializes in developing cloud-based screen reading solutions for web browsing. AEYE focuses on creating voice-driven technology to enhance the accessibility and usability of web content in the United States. Its AI-powered tool, AudioEye, continuously tests, remediates, and monitors compliance with web content accessibility standards, addressing various disabilities, including dyslexia and color blindness.
AudioEye’s projected earnings growth rate for 2025 is also greater than 100%. The Zacks Consensus Estimate for current-year earnings has risen by 10.6% over the past two months, earning AEYE a Zacks Rank of #2.
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Five9, Inc.
Five9, Inc. offers intelligent cloud software for contact centers within the United States, India, and beyond. The FIVN platform features a comprehensive suite of applications that enhances customer service, sales, and marketing across contact center operations.
Five9’s tools include interactive virtual agents, agent assistance, workflow automation, workforce management, and AI insights and summaries. Its expected earnings growth rate for this year stands at 15.6%. The Zacks Consensus Estimate for current-year earnings has also improved by 4.4% in the last 60 days, currently giving FIVN a Zacks Rank of #1.
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Exploring More Winning Stocks
Discover five stocks identified by Zacks experts as having the potential to double in value during 2024. Historically, not every recommendation yields a profit; however, prior picks have surged by +143.0%, +175.9%, +498.3%, and +673.0%.
Many of the stocks highlighted in this report remain under the radar of Wall Street, presenting an opportunity for early investment.
For the latest insights from Zacks Investment Research, consider downloading the report featuring the 7 Best Stocks for the Next 30 Days. Click to access this free resource.
Microsoft Corporation (MSFT): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Broadcom Inc. (AVGO): Free Stock Analysis Report
Five9, Inc. (FIVN): Free Stock Analysis Report
AudioEye, Inc. (AEYE): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
