“Top 3 Stocks Poised to Capitalize on the AI Boom”

Updated On: June 1, 2025 8:55 am

AI Stocks Surge: Amazon, Qualcomm, and Nvidia in Focus

Artificial intelligence (AI) is becoming the leading investment theme of this decade. As AI technology gains traction, Wall Street shows increasing interest in AI-related stocks.

Three analysts from Motley Fool identify their favorite AI stocks: Amazon (NASDAQ: AMZN), Qualcomm (NASDAQ: QCOM), and Nvidia (NASDAQ: NVDA).

Amazon’s Cloud Leadership Drives AI Potential

Justin Pope (Amazon): Amazon stands poised to benefit significantly from AI advancements.

Amazon Web Services (AWS) leads the global cloud market with a 30% share, generating over 58% of the company’s operating income, despite accounting for only 17% of total revenue.

AI applications, primarily software-based, will increasingly rely on cloud platforms. Amazon continues to invest heavily to expand its cloud infrastructure. According to Goldman Sachs, AI will accelerate cloud growth, projecting a 22% annual increase, bringing global revenue to $2 trillion by 2030.

AWS saw a 17% year-over-year revenue growth in the first quarter, indicating a strong future as AI demand rises. The company is developing an AI ecosystem on AWS with tools like Bedrock for generative AI applications, which should help retain and upsell cloud customers.

Analysts predict Amazon’s earnings will grow by an average of 17% annually over the long term, supported by AI and continued growth in e-commerce and digital services. The stock remains a buy at a price-to-earnings ratio of 33.

Qualcomm: Low-Cost AI Fuels Product Demand

Will Healy (Qualcomm): Qualcomm may not be the first company investors associate with AI breakthroughs.

The company faces challenges, notably losing its smartphone chipset business from Apple and potential strains in U.S.-China relations. However, innovations like DeepSeek significantly reduce the cost of AI model development, benefiting Qualcomm’s chipset business, which accounted for 64% of revenue in the first half of fiscal 2025.

Qualcomm has also expanded into the automotive and Internet of Things (IoT) sectors, achieving revenue increases of 60% and 31%, respectively, over the past year, enhancing its AI profile.

In the first two quarters of fiscal 2025, Qualcomm reported $22.6 billion in revenue, a 17% increase from the previous year. While costs rose by 13%, net income reached $6 billion, an 18% year-over-year increase. Currently, Qualcomm trades with a P/E ratio of 15, making it an attractive option for investors focused on AI’s transformative potential.

Nvidia’s Exceptional Revenue Growth in AI

Jake Lerch (Nvidia): Nvidia is a standout in AI stock performance.

Since January 2020, Nvidia’s stock has surged over 2,200%, meaning a $5,000 investment would now be valued at nearly $120,000.

The company recently posted impressive quarterly results for the period ending April 30, 2025, surpassing expectations in revenue and earnings.

Revenue reached $44.1 billion, a 69% increase year-over-year.
Net income was $18.8 billion, up 26% from the prior year.
Share repurchases totaled $14.1 billion within the quarter.

Despite the successful report, Nvidia’s gross margin decreased from 78% to 61% over the past year, presenting challenges alongside its growth trajectory.

# Nvidia Faces Inventory Write-Off Amid China Export Restrictions

Nvidia reported a significant drop in earnings, attributed primarily to a write-off related to export restrictions to China. The U.S. government has limited the delivery of Nvidia’s powerful AI chips to geopolitical rivals, affecting the company’s ability to fulfill orders for the Chinese market. As a result, Nvidia had to write off unsold inventory for the quarter.

Management expects a recovery, forecasting that the gross margin will return to the 70% to 75% range later this year. Nvidia remains a leader in the AI sector, with its chips being the preferred choice among developers. Demand continues to be robust, contributing to strong growth and pushing Nvidia’s market capitalization over $3 trillion.

Investors interested in AI technology may want to consider Nvidia for its potential.

## Is Nvidia a Good Investment Right Now?

Before investing, note that the Motley Fool’s analyst team recently highlighted ten other stocks as better current opportunities, excluding Nvidia. Historical data shows that early investments in stocks like Netflix and Nvidia, when they were recommended, yielded substantial returns.

While Nvidia’s growth remains impressive, it is essential to evaluate other options alongside it for a diversified investment strategy.