Artificial intelligence (AI) investing has been a key theme for the market in 2023 and 2024, and I expect nothing to change in 2025. There are just too many investment dollars flowing into this space to ignore, and companies have barely scratched the surface of what's possible with AI.
As a result, I still think AI stocks are a smart investment, and I've got four no-brainer picks that investors should consider buying right now.
1. Nvidia
Nvidia (NVDA -1.10%) has been the top AI investment pick for two years in a row now, and I think 2025 will make it three straight. The company has been the best investment because it's making a lot of money from the AI competition. Its graphics processing units (GPUs) and the software that supports them are best-in-class, and it has become the go-to pick in this sector.
This has caused Nvidia's revenue to soar over the past few years, but 2025 is expected to bring more of the same. In its fiscal 2026 (ending January 2026), Wall Street analysts expect 52% revenue growth.
NVDA revenue estimates for current fiscal year; data by YCharts.
That's another strong year for the GPU leader, and the growth will be fueled by its new Blackwell chip architecture, which has huge performance advantages over the existing Hopper design.
Nvidia's stock isn't super cheap, but at 62 times trailing earnings, it's not terribly expensive when its growth is considered. It is still a top AI pick for 2025, and investors would be smart to add more, with the stock price dipping 10% from its all-time highs.
2. Taiwan Semiconductor
Another company making huge money from the AI race is Taiwan Semiconductor Manufacturing (TSM 0.04%). TSMC, as it's also known, makes the chips that go into Nvidia's and its competitors' GPUs. This neutral position makes it a great way to invest in AI without needing to pick a winner.
Management wasn't shy about how much these chips are helping its business. During its third-quarter conference call, it said that AI-related revenue is slated to triple this year. That's strong growth, but AI is only a part of the picture at TSMC.
Because Taiwan Semi makes chips for all kinds of devices, it isn't seeing the explosive growth that Nvidia is. Still, analysts expect TSMC to put up 26% growth (in New Taiwan dollars) next year. With the stock trading at 23 times earnings, it's well worth adding some shares at these prices.
3. Alphabet
Many see Alphabet (GOOG -0.65%) (GOOGL -0.71%) as a big spender in AI (which it is), but it's also a huge benefactor. Alphabet is a significant player in the cloud computing space and a key part of AI infrastructure.
Big AI companies can afford to build supercomputers, but many start-ups and established businesses cannot. They rent the necessary computing power from a cloud computing provider like Google Cloud to gain access to the power needed to train AI models.
Cloud computing isn't a massive part of Alphabet's business (it made up 13% of revenue in the third quarter), but it gives Alphabet a growth sector to balance out the relatively slow growth of its Google search business. It also justifies Alphabet's AI investments, since Google Cloud gives developers access to powerful AI tools to build upon.
Alphabet is one of the cheapest big-tech stocks around, trading for 21.4 times forward earnings. For reference, the S&P 500 (^GSPC 0.11%) trades for 23.4 times forward earnings, so Alphabet is a clear bargain in today's market.
4. Meta Platforms
Meta Platforms (META -2.31%) is in a different boat than the other three: It is mainly spending money on AI rather than making any from it. Meta has made its generative AI platform, Llama, free to use, making it more of a money pit than something the company can profit from.
But that's the wrong way of looking at this, as Meta is gaining valuable insight into users and getting access to wider data sets through this approach.
Meta doesn't aim to make money from its AI model; it's just trying to maximize its current social media ad business and develop a leading model that can provide contextualized AI for some of its virtual- and augmented-reality services. However, if it succeeds in either endeavor, the AI investment will massively pay off for shareholders.
The stock is also fairly cheap, trading at 24.2 times forward earnings -- slightly more expensive than the S&P 500. However, revenue is expected to increase by 15% this year, so that slight premium is well earned. Meta Platforms makes another strong stock pick for 2025, and I wouldn't be surprised to see it stomp the market in 2025.
