The Nasdaq Composite has been climbing for over two years, driven by key factors. Artificial intelligence (AI), the upcoming U.S. Presidential election, falling inflation, and interest-rate cuts have fueled its rise. Following a 43% surge in 2023, the index is up 33% in 2024, as of now.
Historical Trends Suggest More Growth Ahead
Historical data implies the rally might not be over. Since 1972, in years following 30%-plus gains, the Nasdaq rose 19% on average. This trend indicates that the market could continue climbing into 2025.
Generative AI advancements are a major contributor to the market’s strength. According to PricewaterhouseCoopers, generative AI could drive a $15.7 trillion economic impact by 2030. This potential creates a significant opportunity for leading AI companies.
Here are 10 top AI stocks to consider for 2025 before the Nasdaq scales new heights:
1. Nvidia
Nvidia (NASDAQ: NVDA) dominates AI processing, thanks to its graphics processing units (GPUs). These GPUs power gaming, cloud computing, and machine learning. Generative AI adoption has further boosted demand for Nvidia’s products, which remains high.
CEO Jensen Huang described the demand as “insane,” prompting Nvidia to adopt a yearly product-release cycle. The company’s next-generation Blackwell processors are on the horizon. Wall Street forecasts 50% growth in 2025 despite challenging comparisons. Nvidia trades at 31 times next year’s projected earnings, a compelling valuation given its growth.
2. Palantir
Palantir Technologies (NASDAQ: PLTR) leveraged its two decades of AI expertise to create the Artificial Intelligence Platform (AIP). Boot camps pairing clients with engineers have driven significant deal conversions.
Palantir’s U.S. commercial segment, including AIP, grew 54% annually. Remaining deal value increased by 73%, with customer numbers up 77%. In total, Palantir closed 104 deals worth $1 million or more, 36 of which exceeded $5 million. With a PEG ratio of 0.65, Palantir is undervalued.
3. Microsoft
Microsoft (NASDAQ: MSFT) catalyzed the AI revolution with its investment in OpenAI and the integration of ChatGPT. Its AI suite, Copilot, could add $100 billion in revenue by 2027.
Azure Cloud grew 30% in fiscal 2024, outpacing competitors. Microsoft is tackling AI adoption hurdles by tracking ROI and lowering costs. With its stock priced at 33 times forward earnings, Microsoft’s growth potential justifies the slight premium.
4. Broadcom
Broadcom (NASDAQ: AVGO) produces essential data center components, making it critical to AI development. Management predicts AI revenue will grow 500% by 2027, with additional hyperscale customers likely boosting results. With a PEG ratio of 0.09, Broadcom appears significantly undervalued.
5. Arm Holdings
Arm Holdings (NASDAQ: ARM) supplies core blueprints for CPUs and GPUs crucial to AI. For example, Nvidia’s GH200 Superchip uses 144 Arm cores. Estimates suggest Arm’s designs power millions of AI chips. With a PEG ratio of 0.87, the stock offers strong value.
6. Taiwan Semiconductor Manufacturing
TSMC (NYSE: TSM) plays a pivotal role as the largest semiconductor foundry. AI processor revenue is expected to triple, reaching 15% of its total. TSMC’s new fabrication facilities will scale production, boosting efficiency. Trading at 28 times earnings, the stock is attractively priced.
7. Alphabet
Alphabet (NASDAQ: GOOGL) leads in AI through Google Cloud and its Vertex AI. It recently launched Gemini 2.0, which supports next-gen AI agents. Alphabet’s cloud services are rapidly growing, offering a massive opportunity. At 25 times earnings, it’s a bargain among AI leaders.
8. Amazon
Amazon (NASDAQ: AMZN) enhances efficiency with AI and offers Bedrock AI for generative models. AWS also provides custom-built AI chips, reducing costs. Improved economic conditions should boost Amazon’s core businesses. Priced at 3 times forward sales, the stock is undervalued.
9. Meta
Meta Platforms (NASDAQ: META) uses AI for targeted ads and content curation. Its LLaMA AI model enables developers to build autonomous agents. Meta’s advertising segment benefits from economic growth. At 28 times earnings, Meta remains a solid investment.
10. Tesla
Tesla (NASDAQ: TSLA) could gain from policy changes under the incoming U.S. administration. Its advancements in full self-driving technology position it for a $28 trillion robotaxi market. Though trading at 173 times earnings, Tesla’s potential in autonomous vehicles may justify the premium.
Seize the Opportunity Before It’s Too Late
Investors often feel they missed out on top-performing stocks. However, opportunities still exist. The Motley Fool has highlighted companies with exceptional potential for growth. Investing now in these AI leaders could position you for significant future gains.