Investing in AI Stocks: Potential for Major Gains Ahead

Since the launch of ChatGPT, just two-and-a-half years ago, the artificial intelligence (AI) sector has seen significant growth, particularly in its stocks. Nvidia and Palantir have both managed to convert $10,000 investments into $100,000. Various other stocks, including many from the so-called “Magnificent Seven,” are also experiencing notable increases. Many tech leaders believe the AI revolution is still in its nascent stage, as both startups and established tech firms race toward achieving artificial general intelligence (AGI).

Exploring Two Promising AI Stocks

As the AI boom is expected to continue in the coming years, let’s examine two additional AI stocks with the potential to turn $10,000 into $100,000.

Image source: Getty Images.

1. Upstart Holdings

Upstart (NASDAQ: UPST) previously impressed investors in 2021 when its stock surged during the pandemic. However, a downturn followed in 2022 as interest rates rose and the credit market tightened. Despite being significantly off its peak, Upstart’s business fundamentals are strengthening. Even with elevated interest rates, its loans have performed well, demonstrating that its lending models exceed traditional FICO scores. In the first quarter of 2023, Upstart saw annualized returns of 12.2%, compared to just 4.1% from two-year Treasury bonds.

Moreover, the company has improved its conversion rates, particularly with the introduction of a new AI model that generates around 1 million predictions per applicant—six times more than the previous model. This advancement has resulted in an increase in conversion rates from 14% to 19.1% for loan applicants. The overall business has flourished, with loans originated doubling to 240,706, which in turn drove revenue to grow by 67% to $213 million.

Despite previous profitability challenges due to rising interest rates, Upstart aims to return to a GAAP profit in the latter half of this year. The company is targeting a vast addressable market and expanding into home and auto loans. Currently, the stock trades at a price-to-earnings ratio of 32, with a market cap of $4.5 billion. Given its recent revenue growth and prospects for profit, the possibility of reaching a $45 billion market cap is within reach.

Image source: Getty Images.

2. CoreWeave

CoreWeave (NASDAQ: CRWV) stands out as a newcomer in the market, specializing in cloud infrastructure designed for generative AI applications. This business model allows customers to rent digital computing power, which has fueled rapid growth. Revenue skyrocketed more than 100-fold from 2022 to 2024, with a 420% surge in the first quarter of 2025, bringing in $981.6 million. Significant demand from major firms like Microsoft and Nvidia has driven this expansion.

However, CoreWeave’s growth comes with challenges. As it expands its data centers, it has incurred substantial debt. The first quarter showed a net loss of $314.6 million, primarily due to high-interest expenses and one-time IPO costs, with $8.6 billion in debt on its balance sheet. Yet, while it’s operating at a net loss, on an adjusted EBITDA basis, CoreWeave reported a profit margin of 62% on revenues of $606.1 million.

CoreWeave faces customer concentration risks, with 62% of last year’s revenue stemming from Microsoft. Nevertheless, the company claims that no single client represents over 50% of its backlog. Following an underwhelming IPO, CoreWeave’s stock price has recently surged, partly due to Nvidia acquiring a 7% stake. This year, the company projects revenues between $4.9 billion and $5.1 billion with adjusted operating income between $800 million and $830 million, indicating sustained growth and profitability before interest.

Currently, CoreWeave has a market cap of $41.5 billion. For its stock to convert $10,000 into $100,000, its market cap would need to reach approximately $400 billion. Given the expansive potential of the cloud computing market and the rising demand for AI, such growth is feasible.

Conclusion: Is CoreWeave a Worthy Investment?

Before investing in CoreWeave, it’s important to consider recent analyses. Currently, CoreWeave has not been recommended as one of the top stocks to buy. It’s essential to evaluate other stocks which historically have produced substantial returns for investors.

Investors should remain informed and continuously assess core strengths and headwinds for any stock they consider. In this rapidly evolving market, opportunities for growth remain, but risks persist as well.

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