Investors Eye AI in 2025: Three Key Stocks to Watch
As 2024 comes to a close, the focus on artificial intelligence (AI) continues to grow. Investors are looking ahead to capitalize on this trend in the coming year.
Nvidia has been a major player in this space, but there are several other promising investments to consider for 2025.
Why Advanced Micro Devices Is Rising
Nvidia controls a staggering 88% of the GPU market, a dominance that some attribute to having the best products. However, Nvidia’s advantage also came from the limited competition it faced in the last couple of years.
Recently, Advanced Micro Devices (NASDAQ: AMD) has emerged as a serious competitor, particularly in the data center GPU sector, thanks to its MI300 accelerators. AMD’s data center services are growing at a rate comparable to Nvidia’s, which has been slowing down recently.
In 2025, AMD plans to roll out its next-generation architecture, the MI325X, to compete with Nvidia’s latest Blackwell GPUs. AMD is also set to introduce the MI400 chipset in 2026, which aims to rival Nvidia’s upcoming Rubin architecture.
While AMD may not surpass Nvidia in size, its innovation and market share gain is very plausible as demand for AI infrastructure grows. Currently, AMD offers an attractive buying opportunity, as many investors are not fully recognizing its advancements.
Image source: Getty Images.
Amazon’s Unique Position in Tech
Among mega-cap technology firms, Amazon (NASDAQ: AMZN) stands out as a highly lucrative choice. The company spans e-commerce and cloud computing, and also boasts a subscription service (Prime), a streaming platform, and a rapidly growing advertising segment. This diverse business model allows Amazon to integrate AI-enhanced features seamlessly.
Amazon is expected to benefit from increased holiday spending, corporate budgets shifting towards AI, and investments in its streaming services. Additionally, the company is investing in AI infrastructure with its in-house chips, Trainium and Inferentia, along with a partnership with Anthropic.
Despite an annual revenue growth rate of just 11%, Amazon’s free cash flow is growing at over 120% year-over-year. This financial flexibility allows the company to reinvest and likely accelerate revenue in the near future, making it a strong option for long-term investors.
Tesla’s Road to Autonomous Driving
Tesla (NASDAQ: TSLA) has faced challenges in maintaining its historic growth rates lately, primarily due to a dip in demand for electric vehicles (EV) amid a tough economic backdrop.
However, this could change as Tesla’s Full Self-Driving (FSD) technology undergoes rapid improvements. There’s optimism that 2025 may signal a major growth phase for Tesla as it rolls out FSD innovation.
Notably, analyst Dan Ives from Wedbush Securities suggests that Tesla could see faster commercialization of FSD due to Elon Musk’s connections with political leaders, possibly benefiting from changes to EV tax regulations. While Tesla’s stock has recently surged, it remains a valuable option for long-term investors, provided they choose an appropriate entry point if prices soften.
Capitalize on This Investment Opportunity
Ever feel you missed out on investing in top-performing stocks? Here’s a reminder of what can happen:
- Nvidia: A $1,000 investment made when we first recommended it in 2009 would now be worth $348,112!*
- Apple: If you invested $1,000 in 2008, you’d have $46,992!*
- Netflix: A $1,000 investment from 2004 would now yield $495,539!*
Right now, we are issuing alerts for three exceptional companies. Don’t miss out on another potential opportunity!
See 3 “Double Down” stocks »
*Stock Advisor returns as of December 9, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Amazon, Nvidia, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
