Artificial intelligence (AI) investing has been in the spotlight for the past two years, and nothing should change that in 2025. It's still the infancy of this megatrend, and plenty of stocks are ripe for growth.
Three stocks that I think could see massive returns in 2025 are Nvidia (NVDA -3.12%), Alphabet (GOOG 1.16%) (GOOGL 1.13%), and Taiwan Semiconductor Manufacturing (TSM -1.22%). These three are major players in the AI field, and their returns could stun investors this year.
1. Nvidia
I know what you're thinking: "Nvidia again? It's already risen so much already." That's true, but there's still plenty of upside.
The company makes graphics processing units (GPUs), the computing muscle behind many of the AI innovations we've seen. Because it has a dominant grip on this field, it has been the primary beneficiary of all of the AI investments companies have made.
This is evidenced by its revenue growth, which has been tremendous over the past few years.
NVDA revenue (TTM), data by YCharts; TTM = trailing 12 months.
While growth has technically started to slow, can you say a company whose revenue increased by 94% year over year is experiencing slow growth? I don't think so.
Plus, Nvidia is expected to have another strong year in 2025, as Wall Street analysts project its revenue will reach $196 billion by the end of fiscal 2026 (ending January 2026) -- a 52% rise from fiscal 2025.
That's another year of strong growth from one of the top AI investments over the past two years. Its returns probably won't be as great as they were in 2023 or 2024, but I still think investors will be stunned by how much Nvidia's stock rises again in 2025.
2. Alphabet
Alphabet is a huge player in AI, and its Google Gemini generative AI platform is evidence of that. Gemini has brought advancements for Alphabet's advertising business, which makes up 75% of its total revenue.
These improvements help Alphabet stay relevant in its industries, and they have the upside of Google Gemini being deployed by other companies for their own use.
Another huge segment is its cloud computing division, Google Cloud. This sector is riding a massive growth wave thanks to AI. Many companies can't afford to build a powerful server filled with Nvidia GPUs, so they rent computing power from providers like Google Cloud. This has translated into phenomenal growth for the segment, whose revenue rose 35% year over year in the third quarter.
However, what makes Alphabet's stock a real value is its low price tag. It trades for about 22 times forward earnings, far cheaper than many of its big tech peers. Compared to a company like Apple, which trades for 30 times forward earnings, Alphabet is actually putting up meaningful growth at a cheaper price tag.
Alphabet stock is incredibly cheap, and part of its returns that will stun investors will come when it is valued at a similar level to its big tech peers.
3. Taiwan Semiconductor
None of the AI technology today would be possible without Taiwan Semiconductor, also known as TSMC. There are other chip foundries in the marketplace, but none have TSMC's consistent track record of developing and producing cutting-edge chips. AI investments aren't slowing, which will benefit the company.
TSMC is a fairly neutral party in the AI competition since it makes chips for nearly every company vying for AI supremacy. Similar to Nvidia, an investment in Taiwan Semi doesn't require you to pick a winner in the AI trend; it just allows you to capitalize broadly on the AI wave.
AI has been a massive trend for TSMC, with related revenue tripling in 2024. And that's just the start. Management projects that AI-related revenue will double again in 2025 and have a mid-40% compound annual growth rate (CAGR) for the next five years. That's monster growth, and it's something investors should focus on.
However, AI is just one part of TSMC's business. Overall, management sees revenue growing near a 20% CAGR over the next five years, a level few companies can achieve. Because of this strong and steady growth powered by AI and other industries, Taiwan Semiconductor is a great buy.
