2024 was a great year for artificial intelligence (AI) stocks, and 2025 could very well be even better. There is still a lot of momentum and there are many positive catalysts on the horizon that could drive further growth. This is a market that most major companies believe will be huge. According to an analysis by Statista, the market is expected to reach $826 billion by 2030.
So what companies are poised for serious growth as we approach the end of the year? I don’t have a crystal ball, but here are my top two picks.
1. The reigning champion will stay at the top.
Yes, Nvidia (NVDA 0.80%) still has room to run. The semiconductor giant is gearing up for another big year, driven largely by sales of its soon-to-be-released “Blackwell” architecture, the latest version of its flagship AI-powered chip.
Much will be revealed next month in the company’s financial results and the guidance it sets, but despite the impending release of Blackwell, demand for its current “hopper” chips remains very strong. It seems that there is potential for a significant increase in revenue in 2025. . Blackwell’s backlog is reportedly 12 months long and should remain that way. For example, Elon Musk recently purchased 100,000 H100s (each iteration of the chip architecture has multiple versions) and plans to purchase another 50,000 H200s soon.
Nvidia’s competitors have struggled to keep pace, and I doubt they will substantially eat into Nvidia’s market share in 2025. AMD plans to release its next-generation AI chips around the same time Blackwell eventually ships. Here’s the problem. This will be a direct competitor to the H200, not the (Blackwell) B200. AMD is a full circle behind at this point. This range will probably shrink, but Nvidia has a lot of money to drive a pace of innovation that AMD can’t match. Despite trying to catch up last quarter, NVIDIA spent about half of what it spent on research and development.
Look at this graph. NVIDIA has a huge amount of free cash flow (FCF) at its disposal to maintain its dominance. Of course, money isn’t everything, but it certainly helps.
NVDA Free Cash Flow Data by YCharts
2. Don’t underestimate Mark Zuckerberg
Meta (META 0.96%) has received a lot of criticism in recent years due to Mark Zuckerberg claiming that the Metaverse would be the next big thing. I don’t think he’s right on this point — the company’s Metaverse division, Reality Labs, posted a $4.5 billion loss last quarter.
But I don’t think this is a stupid thing that many people do. The Metaverse can still grow. But the reason I bring this up is because it shows that Meta is not afraid to take risks and bet big. Zuckerberg has applied the same attitude to AI, investing heavily in building meta-AI and eventually incorporating that technology into the work of Reality Labs.
The truth is, whether or not Reality Labs is profitable, the company is still very profitable, with significant user and revenue growth across its social media platforms. The company makes money by selling targeted ads on its platform, which AI can also do. Become more efficient. It’s also one of the cheapest stocks among major tech stocks. Alphabet is the only major company with a low price-to-earnings ratio (P/E). Regardless of what happens with Reality Labs, I think Meta will be a very attractive option.
But Meta has an opportunity to blend AI and the Metaverse, and if done right, it could be game-changing for the company. To be clear, this is speculation, but it’s possible the company will release a demo along these lines in 2025.
Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Johnny Rice has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
