Is the AI stock market boom continuing or tiring? Top AI stocks such as Microsoft (Microsoft Financial Times) and NVIDIA (NVDA) faces high expectations. For many companies—like parent company Google letter (Google), amazon.com (AMZN) and Facebook parent company meta platform (META) – The rise of generative artificial intelligence brings both risks and opportunities.
With the advent of generative AI (generating text, images, and videos), now is a good time to be cautious amid the hype, especially given recent developments super microcomputer (SMCI).
Heading into fourth-quarter earnings reports, many Wall Street analysts are focusing on data center infrastructure capital spending by cloud and "hyperscale" companies. AI-driven cloud revenue growth will also be a big topic.
Microsoft and Meta will report fourth-quarter results on January 29. Google will report earnings on February 4th. Amazon may announce it on February 6th. Google shares rose 3.5% in 2025 amid growing competition in internet search.
The cloud giant posted strong revenue growth in the September quarter, suggesting that massive investments in artificial intelligence may be paying off.
At the same time, startups OpenAI and Anthropic are developing large, multi-modal and small language-based models to compete with companies such as Google and Meta.
Many companies are suddenly touting AI product roadmaps. In general, look for AI stocks that use AI to improve products or gain strategic advantage.
For example, Meta has created a new tool for its WhatsApp business that allows businesses to run their own GenAI chatbots through the messaging platform. Customers can interact directly with a business’s chatbot to help resolve potential issues, ask about product features, and more.
Deutsche Bank analyst Ben Black said Meta may launch search advertising powered by artificial intelligence in 2025.
Artificial intelligence startups are booming. AI startups also received a record 46.4% of the total $209 billion in venture capital raised last year, up from less than 10% a decade ago, according to Morningstar's PitchBook data.
↑ X Nvidia leads the AI revolution. Can chipmakers stay ahead of the curve?Chipmaker Nvidia has been a leader among artificial intelligence stocks. Nvidia shares are up 171% in 2024 after surging 239% in 2023. However, Nvidia's stock price stabilized in the second half of 2024. For Nvidia, increasing production of its next-generation Blackwell AI chips in 2025 has been a key issue.
Additionally, Nvidia criticized new chip export restrictions announced by the Biden administration. The global AI chip control system prioritizes 20 countries friendly to the United States and limits the computer processing power available to other countries.
It remains to be seen whether President Donald Trump will comply with the new export rules.
Nvidia appears to be leasing more data center capacity, possibly to build its own "artificial intelligence cloud."
competitors Broadcom (AVGO) soared on its demand outlook for artificial intelligence chips. Broadcom produces custom artificial intelligence chips for the cloud computing giant.
Qualcomm, Arm Holdings (ARM), and Marvell Technologies (MRVL) are other AI chipmakers to watch.
At CES 2025, Marvell noted that its AI revenue far exceeded its previous forecast of $2.5 billion in 2025. A JPMorgan report on Marvell said that "management's $8 billion AI custom ASIC revenue target for 2028 now looks conservative."
Broadcom stock ranks No. 42 on IBD's list of 50 growth companies. Astra Labs (ALAB) ranked No. 12.
Taiwan Semiconductor Manufacturing Co. (TSM) ranks 33rd.
farther, Arista Networks (ANET) makes cloud computing network equipment for Meta, Microsoft and other companies. Arista ranks No. 19 on the IBD 50 list.
What’s more, data analysis software makers Palantir (PLTR) bucks the trend and thinks chipmakers and data center companies are the best AI stocks to buy. PLTR stock price surged 340% in 2024.
In an IBD interview, Immediate service (Now) CEO Bill McDermott explains how the enterprise software maker is working to become an AI winner. ServiceNow stock ranks No. 34 on the IBD 50 Index.
Microsoft is the largest investor in generative AI leader OpenAI, having spent approximately $14 billion on the startup. Microsoft announced on January 3 that it plans to spend US$80 billion in building data centers in fiscal year 2025, up from US$50 billion in the previous fiscal year.
Additionally, Nvidia-based CoreWeave is a new AI cloud infrastructure provider planning an IPO in 2025.
Meanwhile, Meta was poached salespersonCRM (CRM) AI executive Clara Shih leads the new “Business AI” team.
In addition, capital spending by cloud computing giants Amazon, Microsoft and Google is also booming. Tech giants have invested heavily in data center infrastructure such as artificial intelligence chips and servers, as well as in research and development.
Capacity constraints in Microsoft's data centers have limited its ability to meet demand, leading to slower growth forecasts for its Azure cloud computing business.
return, apple (AAPL) has been one of the most interesting AI stocks to watch. The big question is whether the Apple Intelligence feature in iPhone 16 models will spur a big upgrade cycle.
The best artificial intelligence stocks to buy span chipmakers, software companies, cloud computing service providers and technology giants.
What's clear is that AI stocks are coming under greater scrutiny.
“We expect AI to shift from ‘tell me’ to ‘show me,’ and any disconnect between investing and revenue generation will come under greater scrutiny,” a Bank of America report said. ”
Overall, semiconductor companies outperformed software companies and emerged as the best AI stocks.
At the same time, many software companies have yet to monetize their AI products. A big question for software companies is how quickly customers can move pilot programs into commercial deployments.
After struggling to generate new revenue from "co-pilots," software companies are now turning to artificial intelligence agents.
In addition, for most large application software companies, how to charge for AI-related products is also a problem. Many U.S. companies are pursuing custom AI software development projects that will take longer to commercialize.
Furthermore, artificial intelligence technology uses computer algorithms. These software programs are designed to mimic the human ability to learn, interpret patterns and make predictions.
Until recently, machine learning was largely limited to models that process data to make predictions. AI models focus on pattern recognition of existing data. Companies are not spending much on AI projects as they consider return on investment.
| company | symbol | Compare ratings | Industry name | artificial intelligence perspective |
|---|---|---|---|---|
| NVIDIA | (NVDA) | 99 | fabless electronic semiconductor company | Cloud computing giants buy more chips to train AI models or run AI workloads. Significantly ahead of rivals AMD (AMD). |
| mass strike | (CRWD) | 96 | Computer Software-Security | AI chatbots promise to automate more functions of security operations centers and reduce the time it takes to detect computer hacking attacks. |
| Arista Networks | (Arnett) | 99 | computer network | Sells computer network switches that speed communications between racks of computer servers in "hyperscale" data centers. As artificial intelligence develops, Internet data centers will require more network bandwidth. |
| Microsoft | (Microsoft Financial Times) | 81 | Computer Software - Desktop | The largest investor in generative artificial intelligence startup Open AI, its ChatGPT users require Azure cloud services. Microsoft's business artificial intelligence assistant Office 365 Copilot will be generally available on November 1. |
| salesperson | (Customer Relationship Management) | 96 | Computer Software-Business | Integrate conversational AI assistants into the user interface of all Salesforce applications. A combination of subscription and consumption-based pricing is expected. |
| amazon.com | (Amazon) | 98 | retail internet | The Alexa smart assistant lags behind in chatbot technology. Cloud computing unit in partnership with OpenAI competitors Anthropic, Hugging Face and Falcon 40B. |
New generative AI models can process "hints" that describe what a user wants to achieve, such as an Internet search query. Generative AI technology creates text, images, videos and computer programming code on its own.
The company will focus on improving productivity by developing customized AI for specific industries. The company’s proprietary data will be used to train artificial intelligence models.
AI systems require massive amounts of computing power to discover patterns and make inferences from large amounts of data. So the race has begun to build AI chips for data centers, self-driving cars, robots, smartphones, drones and other devices.
For chipmakers, analysts expect a market for “edge AI” — on-device processing of artificial intelligence applications — to emerge.
While "training" AI models is now the biggest market for chipmakers like Nvidia, in the longer term the market will shift to "inference," or running AI applications.
What's more, a key question for investors is whether the tech industry's established players will be the big winners from AI generation. Or will a new wave of AI startups eventually take over? OpenAI told employees it now has annual revenue of $3.4 billion, up from $2 billion in January.
OpenAI has raised $6.6 billion in new funding, taking the startup's valuation to $157 billion from $86 billion at the beginning of the year. The new round of financing was led by venture capital firm Thrive Capital. Microsoft is investing again. New investors include SoftBank and Nvidia, but not the rumored Apple.
Additionally, OpenAI recently unveiled more details of its plans to adopt a for-profit business structure by 2025, amid negotiations with and feud with investor Microsoft. Tesla (Tesla) founder Elon Musk.
Large language models provide the building blocks for developing applications. Additionally, an LL.M. can help artificial intelligence systems understand the way humans write and speak. In addition, the LL.M. requires task-specific training data. Companies with access to large amounts of data have an advantage.
OpenAI is part of a wave of LLM startups that includes AI21 Labs, Anthropic and Cohere. Anthropic has launched the latest version of its chatbot Claude 3, which it claims outperforms OpenAI’s GPT-4.
However, OpenAI’s dominance faces a challenge from open source LLM. Musk's xAI announced that it will open source its Grok LLM and release the source code for public use.
Meanwhile, President-elect Trump is expected to push for AI data center infrastructure. Additionally, Trump could rescind President Joe Biden's executive order on artificial intelligence, which requires companies that train large artificial intelligence models to share information about them with the federal government. Additionally, under the Trump administration, tech giants may have more leeway to acquire AI startups.
Meanwhile, Trump appointed his predecessor PayPal Holdings (PYPL) executive and Silicon Valley venture capitalist David Sacks serves as his artificial intelligence and cryptocurrency czar. Also, the saxophone is Tesla (Tesla) and SpaceX founder Elon Musk, who has become an important adviser to Trump.
Follow Reinhard Kraus on Twitter @reinhardtk_tech Learn about the latest developments in artificial intelligence, cybersecurity, and cloud computing.
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