Wall Street had a shaky start to 2025 after markets turned volatile in the final weeks of December. However, tech stocks that were largely responsible for the broader market rally last year have been rebounding over the past few sessions. This saw the Nasdaq posting back-to-back gains on Monday, led by a rally in chip stocks.
Semiconductor stocks have been in the spotlight over the past couple of years thanks to the soaring enthusiasm surrounding artificial intelligence (AI), especially generative AI, led by NVIDIA Corporation NVDA. Experts predict that the AI race will intensify in the near term due to growing demand in a variety of fields.
Given this situation, it would be prudent to invest in AI stocks that are set to excel in 2025. Four such stocks are Broadcom Inc. AVGO, NVIDIA Corporation, AudioEye, Inc. AEYE and Five9, Inc. FIVN. These stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and are likely to see good returns. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tech Companies Focusing More on AI
An increasing number of tech companies, big and small, are investing more in exploring AI. Companies that have heavily integrated AI into their end products have seen significant growth during this period.
On Friday, Microsoft Corporation MSFT said it would be spending $80 billion on AI-enabled data centers in fiscal 2025 to handle AI workload. The tech giant’s 2025 fiscal wraps up in June.
Microsoft isn’t the only company spending big on AI. Several tech giants are investing billions in NVIDIA graphics processing units to train and run AI models. This has seen the stock prices of several companies integrating AI into their end products skyrocketing 300-400% over the past couple of years.
AI Enthusiasm Continues to Grow
The rapid adoption of OpenAI's ChatGPT, launched in 2022, sparked a race among companies to develop their own generative AI solutions. Microsoft, which has invested over $13 billion in OpenAI, supplies cloud infrastructure to the startup and has integrated its models into products like Windows, Teams, and more.
Bloomberg Intelligence projects that spending on generative AI will jump from $67 billion in 2023 to $1.3 trillion by 2032. Another report by UBS projects the four U.S. tech giants, part of the "Magnificent 7," to invest around $267 billion in AI applications as capital expenditure in 2025, reflecting a 33.5% year-over-year increase.
4 AI Stocks With Growth Potential
Broadcom
Broadcom Inc. is a premier designer, developer and global supplier of a broad range of semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor-based devices and analog III-V-based products. AVGO is steadily solidifying its presence in the artificial intelligence (AI) chip market. Broadcom’s Ethernet AI solutions have seen a 400% increase year over year, and its Accelerators business has grown by 350%.
Broadcom’s expected earnings growth rate for the current year is 29.4%. The Zacks Consensus Estimate for the current-year earnings has improved 2.9% over the past 60 days. AVGO currently has a Zacks Rank #2.
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NVIDIA Corporation
NVIDIA Corporation is a major player in the semiconductor industry and has been one of the standout success stories of 2023. As a leading designer of graphic processing units (GPUs), the value of the NVDA stock tends to surge in a thriving crypto market. This is primarily due to the crucial role that GPUs play in data centers, artificial intelligence, and the mining or production of cryptocurrencies.
NVIDIA’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the past 60 days. Currently, NVIDIA has a Zacks Rank #2.
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AudioEye
AudioEye, Inc. engages in creating cloud-based cross-platform/cross-browser screen reader solutions for web browsing. AEYE focuses on creating voice-driven technologies to enhance the mobility, usability and accessibility of Internet-based content in the United States. AEYE offers AudioEye, an AI-powered always-on testing, remediation and monitoring solution that improves conformance with web content accessibility guidelines, identifies and fixes accessibility errors and addresses a range of disabilities, including dyslexia, color blindness, epilepsy, and others.
AudioEye’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 10.6% over the past 60 days. Currently, AEYE has a Zacks Rank #2.
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Five9, Inc.
Five9, Inc. provides intelligent cloud software for contact centers in the United States, India and internationally. FIVN offers a virtual contact center cloud platform that delivers a suite of applications that enables the breadth of contact center-related customer service, sales, and marketing functions.
FIVN’s platform comprises interactive virtual agents, agent assist, workflow automation, workforce engagement management, AI insights and AI summaries.
Five9’s expected earnings growth rate for the current year is 15.6%. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days. Presently, FIVN sports a Zacks Rank #1.
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5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
Five9, Inc. (FIVN) : Free Stock Analysis Report
Audioeye, Inc. (AEYE) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
