Artificial intelligence (AI) was a market-driven theme last year, and AI stocks helped S&P 500 Indexthis Nasdaq,as well as Dow Jones Industrial Average Both surged by double digits. Investors are piling into companies selling artificial intelligence tools and services as earnings climb. The initial wave of AI growth was all about building infrastructure and training models to solve the complex problems of the future.
Now, at the beginning of 2025, as infrastructure construction continues, we have reason to be optimistic about another great year for artificial intelligence. NVIDIA (NASDAQ: NVDA) CEO Jensen Huang said the world's roughly $1 trillion worth of computers must be upgraded for accelerated computing, and that won't happen overnight. Most importantly, 2025 could be the year of agent artificial intelligence, or artificial intelligence agents that can reason, develop solutions to problems, and apply it. This and other real-world applications could be transformative for companies and industries.
The good news is that you don't have to invest a lot of money in 2025 to win in this fastest-growing space. Here are the best artificial intelligence stocks to invest around $500 in this year.
Nvidia has been the star of the AI market so far, and it's well positioned to maintain that success. The company is involved in every stage of AI development, from the chips that enable model training to the software that applies AI to the needs of businesses and organizations around the world.
So Nvidia's double- and triple-digit revenue growth may still be a long way off. To make the story even better, the AI leader has a strong commitment to innovation, committing to annual updates to its graphics processing units (GPUs). This will make it difficult for competitors to beat Nvidia - by the time they catch up, Nvidia will already have new products out there.
Speaking of new products, the company is currently in the midst of a major launch. According to the company, its Blackwell architecture has seen "amazing" demand and will generate billions of dollars in revenue in the first few months of commercialization. As a result, Nvidia stock could see another eye-popping rally in 2025.
letter (Nasdaq: Google) (Nasdaq: Google) It is the cheapest of the "big seven" technology stocks that have driven the market higher recently. The stock trades at 21 times forward earnings estimates, making it quite cheap considering its long track record of earnings growth and solid future prospects.
You probably know Alphabet best through Google searches, the world's most widely used Internet search platform. Advertising on Google generates billions of dollars in revenue for Alphabet every quarter.
But Alphabet is also building an edge in artificial intelligence, which is helping another revenue stream — Google Cloud — grow rapidly. Recently, Google Cloud's quarterly revenue exceeded US$10 billion, and quarterly operating income exceeded US$1 billion.
The service sells AI tools to customers and is powered by its own large language model (LLM), Gemini. Alphabet is also using artificial intelligence to make Google search better and help advertisers reach the best audiences for their products. All of this could mean a big win for Alphabet and its investors in the artificial intelligence craze.
Amazon (NASDAQ: AMZN)Like Alphabet, it benefits from artificial intelligence in two ways. The e-commerce giant uses artificial intelligence to improve its operations and sells artificial intelligence products and services through its cloud computing business Amazon Web Services (AWS).
As you probably know, Amazon is the e-commerce giant, and the company's investments in artificial intelligence can help this multi-billion-dollar business generate more profits over time. Amazon is applying artificial intelligence tools to make its fulfillment process more efficient, for example, by designing optimal delivery routes to save time and money.
AWS has been successful in the field of artificial intelligence, with annualized revenue reaching $110 last year. AWS specializes in every “layer” of AI—from providing customers with a broad range of chips to power their projects, to customizable, fully managed services featuring an LL.M. Amazon has also branched out into apps, recently launching Project Amelia, an AI agent for sellers on its e-commerce platform.
Amazon will benefit from the next wave of artificial intelligence growth, making it an ideal choice in 2025.
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John Mackey is the former CEO of Amazon subsidiary Whole Foods Market and a board member of The Motley Fool. Suzanne Frey is an Alphabet executive and a board member of The Motley Fool. Adria Cimino works at Amazon. The Motley Fool owns and recommends Alphabet, Amazon, and Nvidia. The Motley Fool has a disclosure policy.
The Best Artificial Intelligence Stocks to Invest $500 in This Year was originally published by The Motley Fool