AI Chip Leaders Face Challenges Amid Market Volatility and Regulatory Hurdles

Nvidia, Broadcom Chosen As Top Semiconductor Picks For AI Leadership By Analyst - Taiwan Semiconductor (NYSE:TSM)

Feel unsure about the market's next move? Copy trade alerts from Matt Maley -- a Wall Street veteran who consistently finds profits in volatile markets. Claim your 7-day free trial now. Datacenter remains one of few bright spots in first-quarter semiconductor earnings (i.e. Taiwan Semiconductor Manufacturing Co TSM EPS), with four major U.S. hyperscalers (Alphabet Inc GOOG GOOGL Google, Microsoft Corp MSFT, Meta Platforms Inc META, Amazon.Com Inc AMZN) set to report in the coming weeks. Ahead of earnings, BofA Securities analyst Vivek Arya's consensus tracker indicates that first-quarter global hyper-scale capex will be $93.8 billion, up 71% year-over-year. For calendar years 2025 and 2026, capex is projected at $402 billion and $429 billion, approximately 4% and 7% higher than the prior outlook. Importantly, Arya highlighted increasing concerns that AI data center buildouts might peak in 2025 and then considerably slow down afterward. Also Read: Analyst Sticks With Nvidia Despite Fallout From China Curbs However, he highlighted that capex from non-CSPs, including emerging cloud vendors, enterprises, and national AI infrastructure projects, could be an additional source of sustaining AI investments, filling more than any demand gap. Overall, Arya continues to view the demand for AI computing as healthy, and the ongoing shift toward compute-hungry test-time computing and reasoning models should further help. The analyst's top AI picks remain Nvidia Corp NVDA and Broadcom Inc AVGO, respective merchant and custom AI silicon leaders. According to Arya, the reports about Microsoft canceling new data center leases and Amazon pausing certain discussions on leases are notable. The analyst explained that Microsoft's actions may be tied to OpenAI strengthening its connections with other cloud providers, while Amazon's moves could be linked to forthcoming AI Diffusion rules and may align with their broader onshoring strategies. Meanwhile, Meta and Google recently reaffirmed their 2025 capex guides. Overall, Arya noted that AI demand is simply shifting between vendors rather than disappearing. Price Actions: NVDA stock is up 3.4% at $102.25 at the last check on Wednesday. AVGO is up 3.8% at $176.15. Read Next: CoreWeave Garners Praise Due To AI Growth, Nvidia Partnership Photo: Shutterstock TSMTaiwan Semiconductor Manufacturing Co Ltd$156.583.42%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum51.16Growth82.39Quality-Value52.60Price TrendShortMediumLongOverviewAMZNAmazon.com Inc$180.494.22%AVGOBroadcom Inc$176.323.98%GOOGAlphabet Inc$157.052.05%GOOGLAlphabet Inc$154.722.15%METAMeta Platforms Inc$517.503.44%MSFTMicrosoft Corp$373.541.83%NVDANVIDIA Corp$102.363.51%Got Questions? AskWhich semiconductor stocks to watch for AI growth?How will emerging cloud vendors impact AI investments?Are there investment opportunities in non-CSP AI projects?How might Microsoft's lease cancellations affect competitors?Which companies could benefit from AI infrastructure spending?What trends should investors look for in data center capex?How are Meta and Google's capex plans influencing the market?Will Amazon's leasing strategy open new investment avenues?What future challenges might AI silicon leaders face?Which financial sectors will thrive from AI demand shifts?Powered ByMarket News and Data brought to you by Benzinga APIs

3 Artificial Intelligence (AI) Stocks That Can Skyrocket Up to 232%, According to Select Wall Street Analysts | The Motley Fool

Wall Street's hottest trend -- artificial intelligence -- is expected to yield triple-digit returns for three game-changing companies. Though the last two months have been a roller-coaster ride for Wall Street, the previous two-plus years were dominated by optimism. In 2024, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all soared to multiple record-closing highs Though numerous factors are responsible for powering the stock market to new heights, no catalyst stands out more than the rise of artificial intelligence (AI). With AI, software and systems are given the ability to reason, act, and potentially even evolve on their own. This capacity to make split-second decisions without the need for human intervention is what gives this technology a mouthwatering addressable market. In Sizing the Prize, PwC pegged the impact of AI at $15.7 trillion for the global economy by 2030. The massive size of AI's addressable market hasn't been lost on Wall Street or its analysts. High-water price target projections imply upside of up to 232% for three widely owned AI stocks, according to select Wall Street analysts. The first game-changing artificial intelligence stock that at least one analyst views as offering triple-digit upside is none other than the face of this technological revolution, Nvidia (NVDA 2.10%). Amid a slew of recent price target cuts from Wall Street, analyst Ivan Feinseth of Tigress Financial has held firm at the Street-high target of $220 per share for Nvidia. If accurate, this would imply 117% upside for Nvidia (based on its April 17 close), and likely make it the world's largest publicly traded company. Feinseth's optimism comes from the ongoing build-out of data center infrastructure. Nvidia's Hopper (H100) graphics processing unit (GPU) and successor Blackwell GPU architecture rapidly became the preferred choice for businesses wanting to run generative AI solutions and build/train large language models. Aggressive spending by businesses wanting to lead the charge in their respective industries should bode well for Nvidia. Furthermore, Feinseth has pointed to the company's innovation as a way to justify an aggressive valuation. The introduction of Blackwell, which will be followed by Vera Rubin in 2026 and Vera Rubin Ultra in the second-half of 2027, points to the company's commitment of maintaining its compute advantage over its rivals. Feinseth expects a steady upgrade cycle to fuel Nvidia's growth. But there's also a good chance Feinseth's aggressive price target isn't met. For one, this Street-high projection is going up against history. At no point spanning more than three decades has a next-big-thing technology or innovation avoided a bubble-bursting event. Even though the future of AI is bright and the technology offers real-world use cases, most businesses haven't yet figured out how to optimize their AI solutions, or how to even generate a positive return on their AI investments. This all points to an eventual bubble forming and bursting. Additionally, Nvidia's biggest catalyst -- AI-GPU scarcity -- is waning. Many of the company's top customers by net sales (mostly members of the "Magnificent Seven") are internally developing AI chips and solutions to use their data centers. Even though these chips won't be sold externally, they can take up valuable data center real estate that Nvidia had hoped to grab. As AI-GPU scarcity declines, so will Nvidia's pricing power, as well as its gross margin. A second AI stock with triple-digit percentage upside, based on the prognostication of one Wall Street analyst, is customizable rack server and storage solutions specialist Super Micro Computer (SMCI 3.49%). Based on a late-February price target hike, Loop Capital's Ananda Baruah now sees shares of Supermicro reaching $70. Should Baruah's forecast come to fruition, existing shareholders (as of the closing bell on April 17) would enjoy future gains of 122%! In a note that explained the reasoning behind his and his firm's $70 price target, Baruah pointed to Supermicro's positioning within the AI arena as cause for excitement. Businesses can't garner sustainable moats or first-mover advantages without first getting the necessary infrastructure in place to operate AI-accelerated data centers. Baruah pointed to Super Micro Computer's usage of Nvidia's next-gen GB200 and GB300 chips for AI server businesses as another major catalyst. This coincides with Supermicro's top two customers spending aggressively on infrastructure in 2025. However, a $70 share price might be a tough stretch over the next year for Super Micro Computer given its checkered past. For instance, Supermicro faced allegations of "accounting manipulation" from short-selling firm Hindenburg Research last summer. Following these allegations, Supermicro's fiscal 2024 annual report and fiscal first-quarter 2025 filings were delayed, and its auditor, Ernst & Young, resigned. The good news for Super Micro Computer is that an independent committee uncovered no evidence of wrongdoing by management. Nevertheless, damage to the company's image has been done. It's going to take some time before the investing community trusts in Supermicro's reported figures and forecasted growth rate. Competition among rack server solutions is also picking up at a breakneck pace. It's not clear if Supermicro offers a true differentiator that will allow it to stand out from other AI infrastructure companies over the long run. The third AI stock that could knock it out of the ballpark in the return column, according to one Wall Street analyst, is AI voice recognition and conversational technologies company SoundHound AI (SOUN 8.60%). Based on the sky-high price target of $26 per share set from Scott Buck of H.C. Wainwright, SoundHound AI stock could climb by 232% over the next year. Interestingly, SoundHound AI shares nearly touched $25 per share on Dec. 26, but have fallen below $8 per share amid a bout of historic stock market volatility. Buck's outsized optimism stems from his belief that SoundHound AI has built a rapidly scalable platform. Rather than viewing the company's AI voice recognition technologies as being used in specific industries and ecosystems, Buck is looking at the merging of these ecosystems to complement one another. For instance, using voice recognition in a vehicle to place an order or lock in a reservation with a virtual agent for a restaurant. SoundHound's slice of the revenue pie could grow rapidly if it can cohesively tie these ecosystems together. SoundHound AI also represents the next stage of the AI revolution. Though we're, arguably, still in the initial stages of rapid infrastructure expansion, the narrative is beginning to shift to real-world application and agentic AI -- i.e., AI agents that work with/assist humans and other AI solutions. But as is the theme with this list of potential AI moonshot stocks, there are plenty of questions still unanswered. Despite closing out 2024 with a 101% year-over-year increase in full-year sales during the fourth quarter (Q4), the company's Q4 adjusted net loss nearly doubled to about $19 million. Having to spend aggressively on expansion and innovation is ballooning its losses. While SoundHound did end 2024 with $198 million in cash and cash equivalents (along with no debt) after selling shares of its stock, it used nearly $109 million in its operating activities last year. This was up more than $40 million from the previous year. It's possible SoundHound AI may need to dilute its shareholders again to raise additional capital. Though SoundHound's sales growth is jaw-dropping, it has a long way to go to prove itself to Wall Street and its investors.

2 Artificial Intelligence (AI) Stocks to Buy on the Dip Right Now | The Motley Fool

Artificial intelligence (AI) stocks have delivered impressive gains to investors over the past couple of years or so. But they have fallen out of favor in 2025, thanks to ongoing economic turmoil triggered by the tariff war and concerns regarding the viability of the huge amounts of money spent on AI infrastructure. However, the proliferation of this technology is unlikely to slow down. AI adoption is forecasted to contribute a whopping $15.7 trillion to the global economy by 2030, according to PwC. The consulting firm points out that while a big chunk of this contribution will come from an increase in AI-powered applications, productivity gains are expected to add an impressive $6.6 trillion to the global economy by the end of the decade. That's why now could be a good time to buy top AI stocks on the cheap, considering the potential gains they could deliver in the long run. Let's take a closer look at two names that have been hammered on the market this year but seem capable of flying higher in the long run. Nvidia (NVDA 2.10%) stock has lost nearly a quarter of its value so far this year, and that's precisely why buying this AI pioneer is a no-brainer right now. Nvidia is trading at 22 times forward earnings, which is a discount to the tech-heavy Nasdaq-100 index's earnings multiple of 27 (using the index as a proxy for tech stocks). Of course, Nvidia does face challenges such as tariff-related uncertainties that could make its chips pricier, along with the latest restrictions on the sale of its AI processors to China that will cost the company $5.5 billion. However, the demand for AI infrastructure is likely to remain solid in markets outside China, especially in the U.S. After all, cloud computing giants are expected to spend $320 billion to shore up their AI infrastructure in 2025. Even better, tech giants such as Alphabet have reaffirmed their spending commitments despite the tariff-fueled turmoil. Meanwhile, foundry giant Taiwan Semiconductor Manufacturing says that it has "not seen any change in our customers' behavior" on account of tariffs, which is another indication that AI chip demand remains solid. Nvidia is one of TSMC's major customers. The fact that even the Taiwan-based foundry has reiterated its 2025 capex plan and is expecting sales of AI accelerators to double suggests that it isn't anticipating any slowdown in demand. That's not surprising, as the huge capital investments mentioned above -- along with programs such as the Stargate Project for developing AI infrastructure in the U.S. -- should ensure healthy demand for AI chips. Regarding tariffs, the recent exemptions on the imports of semiconductors, smartphones, and certain other electronic items from China, along with a pause on "reciprocal" tariffs from other countries, suggest that the Trump administration is willing to be flexible. Additionally, President Donald Trump has suggested that the recent escalation in the trade war with China could get to a conclusion. These developments suggest that recent fears about Nvidia's growth hitting a speed bump could eventually turn out to be overblown. As such, buying Nvidia following its recent dip could turn out to be a smart move. The company's revenue guidance of $43 billion for the current quarter points toward an impressive 65% year-over-year increase, while its huge addressable market opportunity suggests that Nvidia could fly higher in the long run. Investors should consider taking advantage of its recent sell-off. SentinelOne (S 0.87%) is another attractive AI stock to buy right now following a 25% decline in its share price this year. The company is benefiting from the growing adoption of this technology in the cybersecurity space. According to one estimate, the size of the AI cybersecurity market is expected to jump by more than 5x between 2023 and 2032, generating more than $120 billion in annual revenue. SentinelOne started offering AI-based tools to customers a couple of years ago. Its cybersecurity platform is now AI-native, which means that it has integrated AI from the ground up across its various offerings. The company offers AI-powered cloud security, data protection, identity protection, and endpoint protection to customers, as well as a generative AI cybersecurity assistant called Purple AI. These tools seem to be gaining healthy traction among customers. This was evident from CEO Tomer Weingarten's comments on the March earnings conference call: In Q4, we achieved record bookings contribution from our data, cloud and AI security solutions, once again, showing the accelerating adoption of our broader platform. Data and AI were our fastest-growing solutions fueled by adoption of our Singularity AI SIEM (security information and event management). The CEO cited several instances where its AI-driven tools helped SentinelOne win business from other customers while also helping it land bigger contracts from existing customers. As a result, the company's remaining performance obligations (RPO) increased by 30% year over year in the previous quarter. That was a point higher than the revenue growth SentinelOne recorded in the quarter, suggesting that it's landing more contracts than it's fulfilling. As RPO refers to the total value of a company's contracts that are yet to be fulfilled, the stronger growth in this metric as compared to SentinelOne's revenue bodes well for the company's future. Moreover, the huge addressable opportunity that AI is adding to the cybersecurity market should ideally pave the way for stronger growth in the company's business. Analysts are expecting SentinelOne to record healthy 20%-plus top-line growth in the current and the next couple of fiscal years. However, don't be surprised to see the company doing better than that. AI has unlocked a much bigger growth opportunity for SentinelOne. It's stock is trading at just over 6 times sales, compared to its price-to-sales ratio of almost 9 at the end of 2024, so investors are getting a good deal on this cybersecurity stock. Consider grabbing this opportunity right away, since the robust adoption of AI in cybersecurity could send SentinelOne soaring in the long run.

2 Artificial Intelligence (AI) Stocks That Could Soar in the Second Half of 2025 | The Motley Fool

The tariff-driven stock market sell-off has put the indexes into a correction phase, hitting artificial intelligence (AI) stocks hard. Many of these stocks lost one-third or more of their value, and a few sell for less than half of their recent highs. However, the severity of the sell-off could help inspire a rebound in the second half of 2025. Advanced Micro Devices (AMD 0.81%) and The Trade Desk (TTD 2.38%) are two stocks that are well positioned to experience such a recovery. AMD lost more than 60% of its value over the last 13 months. Initially, playing second fiddle to Nvidia in the AI accelerator market and the massive revenue declines in AMD's gaming and embedded segments hit this stock hard. More recently, tariff fears and the specter of sales restrictions to Chinese customers inspired further selling. Nonetheless, investors have reason to believe in a rebound in the second half of the year. For one, AMD continues to make advancements with its AI accelerators, with a planned release of the MI350 later this year and the MI400 in 2026. Also, on June 12, CEO Lisa Su plans to speak at the company's Advancing AI 2025 livestream event. The company said the event would exhibit AMD's vision for AI, which could revive interest in the stock if investors buy into AMD's plan for success. Moreover, the outlook has improved for its lagging sectors. The 33% drop in yearly revenue for the embedded segment in 2024 showed signs of stabilizing in the fourth quarter, and the 58% revenue decline in the gaming segment for the same period is unlikely to repeat. Hence, even though revenue grew by 14% in 2024, analysts forecast a 22% rate for this year, and that increasing growth rate could revive optimism. The company's rising revenue growth should also boost profitability and bring about a low valuation. Although its trailing P/E ratio is 88, a forward P/E ratio of 19 arguably makes AMD a bargain. That factor alone could drive investors into AMD stock while it sells at such an attractive forward earnings multiple. AMD is not the only lower-priced stock; perhaps no AI stock has seen a more significant reversal of fortune this year than The Trade Desk. Investors had flocked to this stock amid the rising popularity of its buy-side digital advertising platform. The company allows advertisers and ad agencies to manage ad campaigns, leveraging data capabilities to deliver the highest returns on ad spending. Also, since it is a neutral player, it does not have a bias toward a specific advertising platform, giving it a competitive advantage. Consequently, The Trade Desk stock has long prospered, and the market had arguably priced it for perfection until recently. However, stock prices fell off a cliff after the company missed its own revenue estimate, and the declines continued as a generalized sell-off weighed on the overall market. Since peaking in December, the stock has lost around 65% of its value. Nonetheless, the P/E ratio, which briefly exceeded 225 in December, has now fallen to 64, its lowest level since 2018. Its forward P/E ratio of 28 also could make The Trade Desk a value stock at current levels. Additionally, revenue rose 26% during 2024 to more than $2.4 billion, and even in Q4, when it fell short of its revenue estimate, the figure still increased by 22% yearly. This shows the company continues to grow at a significant pace. Also, the company forecasts at least $575 million in revenue for Q1, which would amount to a 17% growth rate if that prediction holds. Though that would mean a sequential slowdown, the recent stock price decline likely prices in the revenue growth deceleration. Given that conservative revenue forecast, the company is less likely to miss its own revenue estimate again. When also considering its lower forward P/E ratio, investors may decide to add shares while The Trade Desk seems less expensive.

2 AI Chip Stocks Down Over 20% to Buy Now | The Motley Fool

Concerns over tariffs and the potential impact on the economy have hit chip stocks particularly hard this year. The PHLX Semiconductor index is down 23% year to date, trailing the S&P 500's 10% decline at the time of this writing. Nvidia (NVDA 2.10%) shares fell last week after the company said that chip export restrictions to China will ding its bottom line by $5.5 billion when it reports first-quarter earnings results. This news also pulled down the shares of Taiwan Semiconductor Manufacturing (TSM 2.40%), which makes chips for Nvidia and leading chip companies. The near-term outlook for the chip industry is cloudy right now, but for long-term investors, it's a golden opportunity to buy shares of the leaders at attractive valuations. Here's why Nvidia and Taiwan Semiconductor (or TSMC for short) should be at the top of your buy list. If the economy dips into a recession, it could drag the chip industry down with it, but I wouldn't let that stop me from buying shares of Nvidia. It has experienced two episodes in the last 10 years of slowing chip sales (in 2019 and 2022), and both years proved to be amazing buying opportunities. The long-term demand for advanced chips will continue to grow over the next decade. Nvidia's revenue has soared 1,100% over the last five years due to growing demand for graphics processing units (GPUs), which have been used to power recommendation algorithms and chatbots. But tech companies are still investing heavily in GPU-based systems to make artificial intelligence (AI) smarter for future goods and services that are not yet in wide use. Nvidia could capture a significant portion of the $1 trillion of infrastructure being upgraded in the data center market. Humanoid robotics and super-smart AI assistants (agentic AI) will require constant chip innovation to bring these products to their full potential. It's understandable for Nvidia stock to fall a few percentage points to account for the $5.5 billion charge over the China restrictions. But revenue from China made up only 13% of the company's business last year. This is down from 21% two years ago. There are plenty of opportunities outside of China for Nvidia to live up to the expectations implied in the stock's valuation. With Nvidia shares down 24% year to date, investors can buy them at 22 times this year's earnings estimate. This is a bargain for the AI chip leader. TSMC is one of the best stocks to ride the growing demand for AI chips. It's the leading chip manufacturer, with a 67% share of the global foundry market, according to Counterpoint Research. The stock's 23% dip since the beginning of the year has brought its valuation down to attractive levels that set up outstanding return prospects. Top semiconductor companies rely on TSMC to make their chips. The company has spent decades honing its capabilities, and spent $30 billion last year on capital expenditures, putting it in a competitively strong position. TSMC has enormous manufacturing capacity that allows it to meet massive demand for cutting-edge chip technologies, which also is a competitive advantage. From a long-term perspective, export restrictions to China are not a problem for TSMC. Sales to China totaled just 11% of the company's revenue in 2024. TSMC has been expanding its manufacturing base globally in recent years. Last month, the company announced a $100 billion plan to invest in U.S. chip manufacturing, which follows a previous announced investment for $65 billion in the U.S. Management anticipates more than 40% compound annual growth for AI chips over the next five years. That would translate to 20% annualized growth for total revenue, based on management's estimate. Given TSMC's growth opportunities, the stock's valuation looks particularly attractive right now. The current price-to-earnings multiple of 17 is within its past trading range. While the stock could hit new lows before it heads higher in this volatile market environment, investors who buy Taiwan Semiconductor Manufacturing shares at current prices can expect to earn market-beating returns through 2030.

This May Be the Best Artificial Intelligence (AI) Semiconductor Stock to Buy Right Now | The Motley Fool

Shares of Taiwan Semiconductor Manufacturing (TSM 4.89%), popularly known as TSMC, have been under pressure in 2025. Investors have concerns surrounding the health of artificial intelligence (AI) infrastructure spending earlier this year followed by the recent tariff-related turmoil, which sparked a stock market sell-off. Still, the company's latest results show that these factors haven't derailed the company's impressive growth trajectory. TSMC released its first-quarter results on April 17. The company's revenue and earnings rose impressively from the year-ago period, and management's guidance clearly indicates that it isn't expecting a slowdown in its growth on account of the tariff-fueled trade war. Let's take a closer look at TSMC's latest quarterly results and check why it may be one of the best bets in the AI chip sector right now. TSMC's Q1 revenue jumped 35% year over year to $25.5 billion, while earnings shot up nearly 54% from the year-ago period thanks to an improvement in its margins. Specifically, TSMC's net profit margin increased by 5 percentage points from the year-ago quarter, and this can be attributed to the higher prices that it can charge customers. The company enjoys a commanding lead in the global foundry market with an estimated share of 67% in the fourth quarter of 2024, according to Counterpoint Research. Its share of the foundry market increased by 6 percentage points from Q4 last year, thanks to the technology advantage it enjoys over rivals as well as the impressive customer base it has built. TSMC's chip manufacturing services are used by AI chip giants such as Nvidia, Broadcom, Marvell, AMD, and Intel. These companies make various kinds of AI accelerators ranging from central processing units (CPUs) to graphics processing units (GPUs) to custom AI processors. The demand for these AI accelerators is expected to jump significantly in the future. Grand View Research estimates that the AI chip market could clock annual growth of 29% through 2030. Given that TSMC fabricates chips for all the major designers of AI semiconductors, it is one of the best ways to capitalize on this massive end-market opportunity. However, TSMC's AI-related growth potential doesn't end here. That's because the company also manufactures chips for the likes of Samsung, Qualcomm, and Apple. Along with AMD and Intel, which manufacture chips used in personal computers (PCs), TSMC is well placed to make the most of the growing adoption of AI-enabled devices such as smartphones and PCs. The generative AI-capable smartphone and PC market is expected to clock annual growth of almost 35% through 2029, presenting yet another massive growth opportunity for TSMC. So, it is easy to see why TSMC is expecting another quarter of solid growth. Its Q2 revenue guidance of $28.8 billion would be an improvement of 38% over the year-ago period, and this points toward an acceleration in the company's growth in the current quarter. What's more, TSMC is expecting its operating profit margin to jump by 5.5 percentage points year over year in Q2. This should translate into outstanding earnings growth for the company. Another important thing worth noting here is that TSMC has maintained its capital expenditure forecast for 2025 despite tariff-related concerns. This suggests that the company is confident of witnessing strong demand for its chips. This is precisely what CEO C.C. Wei pointed out on the latest earnings conference call: Now let me talk about the recent tariff. We understand there are uncertainties and risk from the potential impact of tariff policies. However, we have not seen any change in our customers' behavior so far. Therefore, we continue to expect our full year 2025 revenue to increase by close to mid-20s percent in U.S. dollar term. TSMC expects its AI chip revenue to double this year. That's why the company is focused on doubling its advanced chip packaging capacity this year to meet the robust demand for AI GPUs and custom processors, along with other chips needed for AI training and inference. We have already seen that TSMC's earnings are growing at a remarkable pace, and that trend is expected to continue in the current quarter as well. Moreover, the long-term potential of the AI chip market and TSMC's dominant position in the foundry space should ensure that it keeps growing at a nice clip for the remainder of the year and for the long run. Analysts are expecting a 31% increase in the company's earnings this year. Importantly, TSMC is expected to maintain double-digit earnings growth for the next couple of years as well. However, the long-term opportunity in the AI chip market, which is expected to grow at an annual rate of almost 35% through 2035, could help TSMC's earnings grow at a faster pace than the market's expectations. Throw in the fact that TSMC is trading at less than 20 times earnings, and it is easy to see why it is a no-brainer buy right now to make the most of the fast-growing AI chip market. So, investors looking to add a top AI stock to their portfolios should consider buying TSMC following its 25% decline this year as its strong earnings growth and attractive valuation could eventually translate into healthy gains on the market.

Should You Forget Rigetti Computing and Buy 2 Artificial Intelligence (AI) Stocks Right Now? | The Motley Fool

Rigetti Computing (RGTI 4.78%) has caught the eye of many tech investors over the past couple of years as the quantum computing market has taken shape. The company is knee-deep in this market, designing and manufacturing quantum computing units and systems, as well as running a quantum computing platform application development. Quantum computing hardware and software could be a $170 billion market by 2040, and the enthusiasm around this space has caused Rigetti's share price to surge 588% over the past year. But despite those gains, the company isn't profitable, and sales tumbled 32% in the fourth quarter to $2.3 million. Rigetti's skyrocketing share price means the stock now has a price-to-sales ratio of 147. That's a staggering valuation, and coupled with the company's losses and falling sales, it's probably best for investors to look elsewhere. Here are two great tech companies to choose from, both tapping into another large tech trend: artificial intelligence. Taiwan Semiconductor (TSM 3.60%), also known as TSMC, is currently one of the most important artificial intelligence companies because it manufactures an estimated 90% of all advanced processors and is a critical production partner for AI leaders such as Nvidia. Technology companies have gone all-in on an AI race, and many of them are spending hundreds of billions of dollars to build huge data centers that will serve as their artificial intelligence foundation for years to come. The ramp-up in spending resulted in TSMC's revenue rising 42% to $25.5 billion and earnings per American Depository Receipts (ADR) popping 60% to $2.12 in the first quarter (which ended March 31). It's worth mentioning that there are some uncertainties around continued data center spending because of the recent tariff announcements, and TSMC could face potential issues if and when a specific semiconductor tariff is announced. Still, no other company has such a strong position in AI chipmaking, and not many companies even have the technical capabilities to produce some of the most advanced processors the company makes. Even amid the backdrop of tariffs, Taiwan Semiconductor could still win over the long term, as tech companies are expected to spend an estimated $2 trillion on AI data centers over the next few years. Microsoft (MSFT 3.19%) was an early mover in AI with its investment in ChatGPT creator OpenAI, and has since integrated the chatbot into many of its services under its Copilot brand. This has helped Microsoft stay on pace with other competitors in the AI software space and expand its potential in new areas like agentic AI. AI agents, which can work on their own to complete tasks like online shopping or making reservations, could grow into a multitrillion-dollar market over the next few years. Still, Microsoft's biggest AI opportunity comes from its strong position in cloud computing. Microsoft is the second-largest public cloud company after Amazon, with 21% of the market compared to 30% for its rival. Microsoft has closed that gap significantly over the past few years, as many developers and companies have chosen its Azure platform. Azure's sales rose 31% in the company's second quarter (which ended Dec. 31), and that demand could increase in the coming years. Goldman Sachs estimates that AI cloud computing sales could reach $2 trillion by 2030. Microsoft won't have to wait around to see the benefits of all these AI opportunities, either. The company's annual AI revenue run rate is now $13 billion, a massive 175% increase year-over-year. With Microsoft integrating one of the most advanced AI chatbots into its services and benefiting from the growth of AI cloud services, the company is well-positioned to tap into artificial intelligence for years to come. Of course, as with buying any stock right now, investors should know that President Trump's tariffs will likely cause more uncertainty in the markets and could cause an economic slowdown. If you have many more years before retirement, you can likely ride out some of the short-term volatility with these companies, but investors closer to retirement may want to look for alternatives outside of the tech space for now.

AMD Jumped Today -- Is the Artificial Intelligence (AI) Stock a Buy? | The Motley Fool

Advanced Micro Devices (AMD 4.81%) stock closed out Wednesday's daily session with big gains. The semiconductor company's share price rose 4.9% in a day of trading that saw the S&P 500 index climb 1.6% and the Nasdaq Composite rise 2.5%. The stock had been up as much as 8.7% earlier in the day's trading. AMD stock jumped today following developments that suggest that the trade war between the U.S. and China could see a meaningful de-escalation in the not-too-distant future. But even with a significant rally over the last couple days of trading, AMD stock is still down 25% in 2025 and 57% from its high. AMD's valuation has seen a big drawdown over the last year as investors have become more cautious about the company's growth outlook in the artificial intelligence (AI) market. Escalations in the trade war and recent news that the company is effectively banned from selling its MI308 graphics processing units (GPUs), and could take a write-down of up to $800 million on the product inventory have added to pressures. On the heels of recent sell-offs, AMD is now trading at roughly 20 times the average analyst target for this year's earnings -- although it's likely that earnings estimates will continue to come down as trade and tariff headwinds become clearer. With the company poised to launch its MI350 AI accelerator in the second half of this year and follow it up with its MI400 accelerator in 2026, shares could be a worthwhile addition for risk-tolerant investors with a long-term holding horizon. But investors should understand that the company still faces high levels of uncertainty in the data center space, and it's clear that Nvidia is still top dog when it comes to AI processors.

Prediction: 2 Artificial Intelligence (AI) Stocks That Could Be Worth More Than Nvidia by 2030 | The Motley Fool

Despite the fanfare, the artificial intelligence (AI) revolution has just begun. With the AI market valued at $189 billion in 2023, the United Nations believes it will become a $4.8 trillion market by 2033. Companies like Nvidia have already taken advantage of this growth, soaring to multitrillion-dollar market caps. But the two AI businesses below trade at just fractions of that value. Over time, however, we could see one of these stocks surpass Nvidia's market cap, leading to huge gains for patient shareholders. Right now, most estimates believe that Nvidia commands somewhere between 70% and 95% of the AI graphics processing unit (GPU) market. GPUs, or graphics processing units, are critical components necessary for training and executing AI models, as well as facilitating many other machine learning tasks. Without GPUs, the AI revolution would not be taking off at nearly the same size or scale. And right now, Nvidia dominates AI-specific GPU sales. What makes Nvidia's GPUs so special? Two things: early investment and vendor lock-in through its developer suite called CUDA. Way back in 2006, Nvidia's leadership recognized the importance of programmable infrastructure. That is, they understood that developers would want to customize their chips to optimize for certain parameters, allowing them to process data or run calculations faster and more efficiently than a stock GPU. To address this, Nvidia released Compute Unified Device Architecture (CUDA). This unlocked the power of parallel computing, making its chips more attractive than the competition when it came to performance optimization potential. Today, many Nvidia customers are using Nvidia products due to CUDA. They've customized their setups from a software perspective around Nvidia's hardware offerings, creating what analysts call "vendor lock-in." This lock-in has granted Nvidia an 80% to 95% market share for AI-related GPUs. It'll be hard to compete with this competitive advantage. But eventually, another chipmaker will break through. And the companies below are my top bets when it comes to both risk and potential upside potential. The road to toppling Nvidia will be a long one. But over the coming years, I suspect either Intel (INTC 5.56%) or Advanced Micro Devices (AMD 4.81%) could break through. AMD is arguably in the best position to potentially match Nvidia's AI dominance over the next five years. The company's latest GPUs have performed well against Nvidia's Blackwell chips on benchmark tests. Plus, Nvidia is having difficulty manufacturing enough chips to meet demand, leading to multi-month delays on shipments, giving AMD an ability to more rapidly meet rising demand despite arguably inferior products with less vendor lock-in. Right now, Intel is far behind AMD in terms of catching up with Nvidia. But its market cap and valuation more than reflect that reality. Intel is valued at just $80 billion versus a $140 billion valuation for AMD. Meanwhile, Intel shares trade at just 1.5 times sales versus a 5.6 times sales valuation for AMD. Betting on Intel reaching Nvidia's valuation by 2030 is clearly a long shot. But the company is investing heavily to improve its chips' competitiveness, as well as its overall manufacturing capacity. And late last year it received a multibillion-dollar contract from Amazon for AI chips and another multibillion-dollar contract from the U.S. military. Which company am I betting on today to catch up with Nvidia? I'm going with AMD. Its chip performance and manufacturing capabilities heftily outpace Intel's for AI GPUs. And with 52% of revenue coming from data centers versus just 25% for Intel, AMD is clearly much more leveraged to the AI economy than Intel. Nvidia's CUDA architecture will remain a strong barrier to competition for years to come. But both AMD and Intel have such cheap relative valuations that both are worth a small, speculative investment, even if the odds of overtaking Nvidia by 2030 remain slim.

3 Artificial Intelligence (AI) Stocks That Could Soar in the Second Half of 2025 | The Motley Fool

Millions of businesses and individuals now use artificial intelligence (AI) tools like ChatGPT on a daily basis. Despite impressive growth over the last 12 to 24 months, the AI revolution has just begun. Estimates vary, but nearly every forecaster is expecting seismic growth in the technology and the demand for it over the next decade. The United Nations Trade and Development organization, for example, believes AI will become a $4.8 trillion industry by 2033, up from just $189 billion in 2023. In early 2025, many AI stocks experienced brief corrections. No one knows what will happen next, but it's not hard to see the three AI businesses below soaring in value before the year is up. If you want to make sure your portfolio is exposed to growth in AI, buying stock in Nvidia (NVDA 3.86%) is a no-brainer. In my view, no other company is as directly exposed to the explosion of AI technologies. Nvidia doesn't specialize in developing AI products or services. Instead, it manufacturers graphics processing units (GPUs). These chips allow developers to process the massive amounts of data necessary to train and execute AI models and other machine-learning tasks. Without GPUs, today's AI revolution likely would not be occurring. And right now, Nvidia is dominating the space with an 80% to 95% market share for GPUs related to AI-specific tasks. Past chip revolutions suggest that the competition will eventually catch up to Nvidia's capabilities, eating into its dominant market share. But the company has a secret weapon: CUDA, a developer platform that allows customers to customize its chips for specific applications. CUDA entrenches users into its software and hardware system, resulting in high customer loyalty. The stock may look pricey at 18.4 times sales, but that's actually well below its trailing-five-year average. And sales growth remains strong, making this a great long-term pickup on the correction. NVDA data by YCharts; PS = price to sales. Most people may not think of Microsoft (MSFT 2.19%) or Amazon (AMZN 4.55%) as AI companies. But apart from Nvidia, these two businesses are arguably the best positioned in terms of AI exposure. That's not due to Amazon's sprawling e-commerce business or Microsoft's Office suite. Instead, it's because of each company's cloud computing segments. Amazon calls this division Amazon Web Services (AWS); Microsoft's is Azure. And as we'll see, these two business segments are driving forces behind much of what is happening in the AI space today. The biggest group buying Nvidia's GPUs are not AI companies themselves, but cloud computing businesses like AWS and Azure. Cloud infrastructure is essentially a distributed computer that can scale up or down at the press of a button -- a perfect modular solution for AI companies looking to test and deploy their products. With 30% and 24% market shares, respectively, AWS and Azure dominate the cloud computing space, and thus the AI space when it comes to actually building and delivering these services to customers. MSFT data by YCharts. Cloud computing is superior by far to building out independent computing infrastructure for every AI company. And with more resources to invest in top-notch products like Nvidia's GPUs, AWS and Azure should have no issue maintaining their large market shares, keeping them at the center of the AI revolution for years to come. Neither company is growing as quickly as Nvidia, given their more diversified business models. In exchange, investors receive much lower valuations. As the artificial intelligence space grows larger and larger over the years, expect the market to value these businesses more like crucial AI suppliers than the fairly diversified conglomerates they are today.

3 No-Brainer Artificial Intelligence (AI) Stocks to Buy Right Now | The Motley Fool

Economic uncertainty and trade tensions have spooked the market, but buying these top AI stocks could be a genius move in hindsight. Tariff uncertainty and escalating trade tensions between the United States and China have begun weighing on the broader stock market. The technology-leaning Nasdaq Composite index was roughly 20% off its high as of Tuesday afternoon as the market turns away from various AI stocks that have performed well since 2023. In these situations, it helps to maintain a long-term investing mindset. The market occasionally experiences downturns, and history has shown that investing in high-quality stocks during these moments tends to pay off in the long run. There's little doubt that artificial intelligence (AI) is here to stay, and now could be a great chance to add some of the top AI stocks while they trade at a discount. Here are three that have outstanding growth prospects and trade at compelling prices. These are the no-brainers to consider buying now. Trade tensions have clouded the technology sector's near-term outlook, but Taiwan Semiconductor Manufacturing (TSM 4.09%) could thrive, regardless of how things ultimately unfold. This leading semiconductor manufacturer captured a staggering 67% of global foundry revenue in Q4 2024. In other words, AI investments would likely need to slow dramatically everywhere for TSMC's business to stumble. That doesn't seem likely, at least thus far. TSMC noted on its Q1 earnings call that its AI customers have not changed their behavior amid tariffs and reiterated expectations for mid-20% revenue growth this year. Barring a slowdown in broader semiconductor spending, analysts estimate TSMC will grow earnings by nearly 21% annually over the next three to five years. One thing to look out for is TSMC's risk due to its geopolitical exposure to China's tensions with Taiwan. The stock price might already reflect those risks, though. TSMC trades at a price-to-earnings (P/E) ratio of 21, a bargain for such a critical AI company with such high anticipated earnings growth. It could be a good idea to buy if you're comfortable with the geopolitical situation. Tariffs will likely be a near-term headache for Amazon (AMZN 4.55%). The e-commerce giant relies heavily on Chinese suppliers, and tariffs could raise prices to a point where consumers stop shopping. Assuming the U.S. and China eventually resolve their trade dispute, the tariff noise could be a distraction from Amazon's AI opportunity. Amazon's cloud platform, AWS, will benefit immensely as AI drives increased cloud usage over the coming years. Not only is AWS the world's leading cloud platform, but it also generates the majority of Amazon's profits despite representing only a fraction of the company's total sales. Prolonged tariffs on Chinese goods would hurt Amazon, but they shouldn't stop AWS from driving earnings higher over time. Analysts estimate that Amazon will grow its earnings by an average of 20% annually over the long term. It's more than enough growth to justify buying Amazon stock at just 31 times earnings amid this tariff drama. As the economy becomes increasingly digital, so is advertising. The Trade Desk (TTD 2.96%) has ridden this trend, spending years as a top growth stock. The company's independent technology platform utilizes AI and data analytics to sell ads targeted to their ideal audience across websites, music and video platforms, and internet-connected TVs. It has profitably grown as an alternative to closed-loop digital ad ecosystems, like Alphabet's Google and Meta Platforms, which offer less control to advertisers. The Trade Desk sits nearly 64% off its highs today after missing its Q4 revenue guidance for the first time. The underwhelming quarter was due to the company transitioning its customers to a new AI-powered platform, so this doesn't seem like a long-term concern. However, since the stock traded at such a high valuation at the time, the unexpected miss caused a dramatic sell-off. Considering this decline has been the worst in The Trade Desk's history, you could argue the market overreacted. The Trade Desk is trading at its lowest enterprise value-to-sales ratio (9.4) since 2019. Meanwhile, the company is already comfortably profitable, and analysts estimate earnings will grow by almost 23% annually for the next three to five years. It may be time to add shares before the stock starts regaining Wall Street's trust.

Nasdaq Bear Market: Is AMD or Nvidia the Best Buy Now? | The Motley Fool

Nvidia (NVDA 3.86%) and AMD (AMD 4.81%) are two of the biggest providers of artificial intelligence (AI) computing hardware, but Nvidia is much larger and more successful than AMD in this regard. However, after the latest market sell-off, each is still well off its all-time highs, with AMD down around 60% and Nvidia down 30%. That's a large difference in how far each stock is down from its all-time high, and it begs the question: Is AMD cheap enough to be a better stock pick than Nvidia? The graphics processing unit (GPU) is the most critical component in training AI models. Nvidia's CEO and co-founder, Jensen Huang, invented the GPU in 1999, and AMD also makes GPUs. These devices have a unique trait: They can process multiple calculations in parallel. This makes them ideal for workloads that need intense computing power, like AI. Furthermore, users can compound this parallel computing effect by connecting multiple GPUs together in clusters, which can include more than 100,000 GPUs right now. That's a ton of computing power, and Nvidia has capitalized on the massive AI computing market. Since the start of 2023, Nvidia's revenue has dramatically increased overall. Data center revenue (which encompasses the GPUs used for AI computing) makes up a huge chunk of Nvidia's $131 billion total, contributing $115 billion to that total over the past 12 months. AMD has also captured part of the data center growth, as its data center division saw revenue increase 94% over the past year. That's excellent growth, but it pales in comparison to what Nvidia posted. In 2024, AMD's data center revenue was $12.6 billion, which is around a tenth of what Nvidia produced. Additionally, in the latest quarter, AMD saw 69% data center growth, while Nvidia's data center segment rose 93%.So, just because AMD's data center segment is smaller doesn't mean that it's growing faster. With Nvidia, you get a one-two punch of larger scale and faster growth, which is a combination that's hard for AMD to compete against. Furthermore, while Nvidia is focused solely on GPUs and the products to support them, AMD has other offerings that haven't performed as well as its data center division. That has hurt AMD's overall growth rate. So, while Nvidia's revenue has risen nearly 400% since the start of 2023, AMD's hasn't even cracked double-digit growth despite strong performance from the data center market. This is a huge problem, and it explains why AMD's stock performed so poorly over the past year. But could it be primed for a rebound in 2025? Because each company is still putting up rapid growth in its data center divisions and AMD had a one-time event that caused its earnings per share (EPS) to spike during one quarter, using the trailing price-to-earnings (P/E) ratio to value these stocks isn't a great idea. Instead, I'll use the forward P/E ratio to compare these two. This method has its flaws because it uses analysts' projections rather than actual results, but it's one of the best tools investors have to understand where each stock is going. From this perspective, AMD's stock is cheaper, but not by much. With Nvidia trading for 23 times forward earnings and AMD trading at 19, it isn't much cheaper. For how much AMD has underperformed and given its far smaller market share, you'd think it would trade at an even deeper discount, but it doesn't. As a result, I think Nvidia is the far better buy here, because it's a much stronger company with a significant foothold in one of the greatest computing markets to ever emerge. Furthermore, with Nvidia's current price tag not far off from the broader market's 19.8 times forward earnings (as measured by the S&P 500 (^GSPC 1.67%)), it looks like a great stock to buy right now.

Should You Forget Nvidia and Buy These 2 Millionaire-Maker AI Stocks Instead? | The Motley Fool

The market doesn't know what to make of Nvidia (NVDA 2.61%) stock right now. Its shares are down 30% so far this year, and analysts are trimming their growth forecasts for the chipmaker as its valuation slides. The graphics processing unit (GPU) leader now trades at just 18.4 times sales -- its cheapest multiple since 2023. Nvidia stock is arguably a great buy following the market's early 2025 correction. But if you're looking to load up on bargain artificial intelligence (AI) stocks, don't overlook the two lesser-known companies below. Each provides a unique way to invest in the AI space, and both have more growth potential than Nvidia. If you want to enhance the upside potential in your portfolio by investing in AI stocks, check out SoundHound AI (SOUN 8.46%). There are some important risks to be aware of, but the company's growth potential is readily apparent. With a market cap of only $3.3 billion, SoundHound is one of the smallest public companies that's heavily exposed to the AI revolution. It specializes in AI applications related to audible speech, such as automated drive-through windows and AI agents answering customer support phone calls. This segment should experience rapid growth: A recent report from market research company SNS Insider forecasts that the AI voice generator market -- valued at just $3.2 billion in 2023 -- will grow into a $40 billion market by 2032. SoundHound's revenue hit a new record last quarter, rising 101% year over year to $34.5 million. The stock trades at 32.5 times sales, showing that the market has already priced in a lot of anticipated growth. But it's possible that the market still underestimates SoundHound's long-term growth potential. The AI revolution is just getting started, and its true potential likely far exceeds what most of us can imagine today. Due in part to its current small size, SoundHound has plenty of upside potential. But that may also limit its ability to compete against the giants of big tech with their massive research and development budgets -- many of them are investing heavily in voice AI applications. Given the level of competition that is developing in this niche, SoundHound AI faces a lot of risk, and its valuation -- though it's down markedly from the peak it surged to in early January -- isn't obviously cheap. But when it comes to publicly traded AI companies with massive upside potential, SoundHound tops the list. Looking for a stock with a little less risk but plenty of upside potential? Check out Palantir Technologies (PLTR 4.40%). While it's not a pure-play AI business, Palantir's future will largely be driven by its investments in AI. With a market cap of roughly $210 billion, Palantir is significantly larger than SoundHound, but it's still less than a tenth the size of Nvidia with its $2.4 trillion market cap. Just this week, Palantir stock jumped on the news that NATO would be officially adopting its AI-driven military system. This is a giant vote of confidence for its offerings, and a sign that the company will have a leading role in the modernization of military systems and strategies around the globe. Unfortunately for would-be new investors, Palantir stock is outrageously expensive, trading at 80.5 times sales. Even with sales growth expected to be around 30% annually in both 2025 and 2026, that's a steep premium. Nvidia, by comparison, trades at just 18.8 times sales, and its revenue growth rate is expected to be nearly twice as fast as Palantir's this year. From a profit standpoint, Nvidia looks even more attractive: Its shares trade at just 33.7 times trailing earnings and 22.4 times forward earnings -- significantly lower than Palantir's valuations. Both SoundHound and Palantir have exciting potential, but from a valuation standpoint, it's hard to make the case that either is more attractive as a long-term investment than Nvidia right now. Opening small positions in each could be a great way to diversify your portfolio and expand your AI exposure, but that's no reason to pull away from Nvidia. Its relatively cheap valuation and dominant position in the market for AI GPUs continue to make it a wise core holding for any AI sector investor.

1 Magnificent Artificial Intelligence (AI) Stock to Keep an Eye on Before It Starts Soaring | The Motley Fool

Dell Technologies (DELL 5.98%) is having a miserable 2025 so far. Shares of the information technology giant are down 28% this year, driven by a mix of tepid quarterly results and the potential effect of the tariff war on the company's prospects. That's not surprising. Dell manufactures servers, personal computers (PCs), and other computer peripherals, sales of which could be affected by the Trump administration's "reciprocal" tariffs considering that the company's footprint is spread worldwide. Specifically, Dell's assembly lines, manufacturing, and supply chains are spread across China, Taiwan, Vietnam, Mexico, Malaysia, and other countries. Of course, the company does have facilities in the U.S. as well, but its globally diversified supply chain does expose it to tariff-related turmoil. However, the administration has paused the reciprocal tariffs for 90 days in a bid to negotiate with other countries, while it has exempted imports of semiconductors, computers, and smartphones, among some other electronic items from China. While the Trump administration points out that it is taking a look at potential semiconductor tariffs, recent developments should be a relief for companies such as Dell. With that being said, will it be a good idea to start accumulating Dell stock in the wake of its pullback this year? Let's find out. The tariff-related uncertainty is going to weigh on Dell stock in the near term. The company's sales and earnings outlook could be affected negatively if the Trump administration decides to tax imports of computers and semiconductors. However, recent actions suggest that the administration is willing to be flexible when it comes to negotiating with its trade partners. Though the economic tussle between China and the U.S. has been escalating of late, there are signs that both countries are willing to negotiate. So, it remains to be seen how this tariff-fueled economic turmoil will play out, and it cannot be denied that the uncertainty is going to take a toll on the likes of Dell in the near term. For instance, ASML Holding, which is known for manufacturing critical chipmaking equipment, has just pointed out that its 2025 revenue could be at the lower end of its guidance range amid the uncertainty created by the tariff war. However, the company remains confident that artificial intelligence (AI) will remain a key growth driver for the semiconductor industry, and that's why it remains upbeat about the demand outlook. A similar story could unfold for Dell, since it sells server and storage systems along with PC and other peripherals. The company is forecasting an 8% increase in revenue in fiscal 2026, which would be in line with its growth last year. Meanwhile, Dell expects its adjusted earnings to grow by 14% in fiscal 2026 to $9.28 per share, a projected improvement of four percentage points over the previous year. However, as the following chart shows, analysts have reduced their earnings growth expectations from Dell for the current and the next two fiscal years. This can be attributed to the potential effect of tariffs on Dell's performance. However, if the negotiations between the U.S. and the other countries turn out to be favorable, there's a chance that these earnings estimates could start heading higher once again. That won't be surprising, since Dell is serving a couple of huge AI-related addressable markets. The global AI server market is expected to grow by almost 6x between 2024 and 2030, generating a whopping $840 billion in revenue at the end of the forecast period. Dell expects to sell $15 billion worth of AI servers in the current fiscal year, which would be a 50% improvement over last year. It remains to be seen if Dell manages to hit this target amid the ongoing turmoil, but if the tariff negotiations unfold favorably and chip imports remain exempted, there is a chance that it may be able to exceed its forecast. That's because of the huge amount of money that's likely to be spent on AI infrastructure, especially in the U.S. For instance, OpenAI and SoftBank are planning a $100 billion investment in AI infrastructure this year under the Stargate Project, followed by an additional $400 billion over the next four years. Moreover, other AI companies have been placing large orders for Dell's servers. The company received a $5 billion order from xAI in February this year, taking Dell's AI server backlog to $9 billion. More such orders thanks to projects such as Stargate and the huge AI investments lined up by tech giants in the U.S. cannot be ruled out, which could pave the way for Dell to sell more AI servers. On the other hand, Dell's position as the third-largest PC original equipment manufacturer (OEM) with a market share of 15% should allow it to capitalize on the growing demand for AI PCs. The AI-capable PC market was worth an estimated $50 billion last year, and it is expected to grow by almost 5x by 2030, according to third-party research. Again, tariffs could weigh on PC sales in the near term. But it cannot be denied that AI PCs are going to be the future as they will allow users to run generative AI applications, and the demand for on-device AI applications is expected to increase at a nice clip. That's why it would be a good idea for investors to consider accumulating Dell stock while it remains beaten down. After all, the stock is trading at an attractive 13 times trailing earnings and 9 times forward earnings. Its price/earnings-to-growth ratio (PEG ratio) of just 0.65 based on its five-year earnings growth estimates (as per Yahoo! Finance) further suggests that it is undervalued right now. That gives investors another incentive to buy it, considering its sunny long-term prospects.

Meet the Latest Supercharged AI Stock I Bought During the Stock Market Downturn

There are plenty of stocks on sale right now with the market well off its all-time highs. One of the stocks I added to my portfolio a while back due to lower prices was Broadcom (AVGO 0.98%), although its price today is lower than when I purchased it. I'd still consider adding to my position today, as it's an incredible AI company with a bright future. With any stock, I'm not concerned about what the stock price does a week or a month after I purchase it. Instead, I'm focusing on a three- to five-year time frame, and Broadcom's outlook during that period is quite strong. XPUs are an emerging opportunity for Broadcom Broadcom has its fingers in many industries. Its products range from mainframe software to internet connectivity to storage systems. However, I'm most focused on its emerging product line for artificial intelligence (AI) model training. Broadcom is using its chip design expertise to assist companies in producing their own custom AI accelerators, which Broadcom calls XPUs. XPUs are similar to graphics processing units (GPUs), which are still the most popular choice when it comes to training AI models. However, XPUs can outperform GPUs when the workload is properly set up. In the early days of AI training, the AI hyperscalers were all attempting to figure out the most efficient way to train these models. So, having a flexible computing device like a GPU was critical. Now, these hyperscalers have an idea of how to train their respective AI models, so building a device tailored to that computing method allows them to train AI models more efficiently. Furthermore, because the design work is done between Broadcom and its client, clients don't have to pay such sky-high premium as they do with Nvidia (NASDAQ: NVDA), the current GPU leader that has made a massive profit from its devices. Broadcom's management team sees a massive market for these GPUs and other connectivity switches used in data centers. In its fiscal 2024, Broadcom generated $12.2 billion in revenue from this sector, up from $3.8 billion in 2023. However, management believes this segment could have an addressable market of $60 billion to $90 billion by fiscal 2027, which would indicate massive growth. There's a key point in that $60 billion to $90 billion projection: It only comes from three clients. With two more hyperscalers slated to launch their XPUs this year and two more selecting Broadcom as a partner for their XPUs, this market range will dramatically expand from the current projection. Given that Broadcom generated $54.5 billion in revenue over the past 12 months, its revenue could easily double in the next three to five years from one product line alone. This is huge news for investors, as Broadcom's XPU growth is a way to invest in an AI hardware stock like Nvidia was at the start of 2023. The stock looks like a solid deal right now Broadcom's stock trades for about 26 times forward earnings following the sell-off. Although that's a cheaper price than investors previously had to pay for Broadcom, it's still not cheaper than some of the other big tech stocks in the market. AVGO PE Ratio (Forward) data by YCharts However, I think there's massive growth in store for Broadcom over the next few years as its business shifts to focusing on XPUs. As GPUs start to wear out, another demand cycle will appear for AI computing hardware. While not every GPU will be converted to an XPU, there will be some changeover, allowing Broadcom to expand its revenue base dramatically. If you can focus on the three- to five-year picture for Broadcom, it looks quite bright. At its current price, Broadcom stock is still a no-brainer buy.

2 Top Artificial Intelligence (AI) Stocks to Buy Right Now | The Motley Fool

The broad market sell-off this year has weighed heavily on technology stocks. While the S&P 500 is down by about 11% from its peak, the tech-heavy Nasdaq Composite index is off by about 15%, and this more pronounced pullback isn't surprising considering that investors have become more risk-averse of late. This is one reason why artificial intelligence (AI) stocks, which had been in fine form on the market for the past couple of years, have been heading lower even as many have been reporting solid quarterly results. However, AI adoption is set to increase at a robust pace in the long run: Grand View Research projects 36% annualized growth in this space through 2030. As a result, companies selling AI-focused hardware and software should ideally experience healthy growth over the long run. That's why now would be a good time to take a closer look at some solid AI stocks that have dropped in 2025 to attractive valuations, but that have the potential to fly higher in the long run thanks to the massive opportunities they are sitting on. Shares of chip designer Advanced Micro Devices (AMD 1.83%) are down by close to 29% in 2025 as of this writing. As a result, AMD now trades at an attractive 19 times forward earnings. That's well below the tech-laden Nasdaq-100 index's forward earnings multiple of 24. Even better, AMD is undervalued with respect to the growth that it is expected to deliver over the next five years. This is evident from the stock's price/earnings-to-growth ratio (PEG ratio) of just 0.35 based on its projected five-year earnings growth, according to Yahoo! Finance. The PEG ratio is a forward-looking valuation metric that's calculated by dividing a stock's price-to-earnings ratio by the estimated annual earnings growth it could deliver over various periods. Stocks with positive PEG ratios of less than 1 are generally viewed as being undervalued with respect to their projected growth. Consensus estimates are projecting a 36% increase in AMD's earnings to $4.51 per share this year. That's expected to be followed by healthy growth over the next couple of years as well, despite recent downward revisions in those estimates due to the economic headwinds created by President Donald Trump's tariffs and trade wars. Of course, tariffs on semiconductors, computers, and raw materials could dent AMD's sales and earnings growth, as the company will be forced to increase the prices of its offerings, absorb higher costs, or both. However, Trump has -- at least for now -- exempted semiconductors from his tariffs, and put a 90-day pause on the comprehensive tariffs he imposed on most countries in the world to allow time for negotiations. It remains to be seen how those various international negotiations will play out, but the administration's apparent willingness to negotiate with trade partners suggests that favorable outcomes may be possible. Additionally, tech companies' heavy investments in AI infrastructure are likely to continue despite the tariff-related turmoil. This explains why AMD is expecting to report next month that its first-quarter revenue increased by 30% year over year at the midpoint of its guidance range. The company is on track to benefit from the growing demand for AI server CPUs (central processing units) and graphics processing units (GPUs), along with the growth in AI-enabled personal computers. Meanwhile, there are other catalysts, such as an increase in the number of design wins in the embedded chip market. Also, the upcoming gaming console upgrade cycle should be a key growth driver. In sum, there is more to AMD than just AI, which is why investors looking for growth stocks trading at attractive valuations should consider buying it hand over fist right now. DigitalOcean (DOCN 2.24%) provides on-demand cloud computing infrastructure to small businesses, developers, and start-ups, and it has recently started offering AI solutions as well. In October, the company released Droplets, an AI infrastructure platform through which customers can rent its cloud platform to train and deploy large language models (LLMs). Demand for the platform was so strong that DigitalOcean was finding it difficult to provide enough capacity. That wasn't surprising as Droplets allowed its customers to deploy AI applications without buying expensive hardware. Not surprisingly, DigitalOcean is now investing more money to bolster its AI infrastructure. DigitalOcean customers can also rent a more powerful version of its cloud infrastructure platform through the Bare Metal GPUs solution. The company notes that Bare Metal gives customers "maximum performance and control, ideal for sustained, high-throughput workloads that demand direct access to hardware resources and customization." So customers looking to run heavier AI workloads can also turn to DigitalOcean to fulfill their requirements. DigitalOcean is doing the right thing by investing in AI hardware so that it can rent capacity on it to customers, as the market for that is on track to grow substantially in the long run. Goldman Sachs estimates that the cloud infrastructure-as-a-service (IaaS) market could be worth a whopping $580 billion by the end of the decade. The addition of AI tools to its offerings is helping DigitalOcean drive stronger customer spending. In its fourth-quarter earnings release, it pointed out that the "continued traction in AI drove quarterly revenue for our top 500+ customers, representing 22% of total revenue, to grow at 37% year-over-year." The company's average revenue per customer jumped 14% year over year. DigitalOcean is set to move deeper into AI with the addition of agentic AI solutions, which will allow its clients to build AI agents with the help of powerful LLMs on its GenAI Platform. As a result, it won't be surprising to see its customers spending even more with DigitalOcean, and even more customers signing up with it. All this helps explain why analysts expect DigitalOcean's bottom-line growth to improve. Finally, with DigitalOcean trading at just 13.5 times forward earnings following its recent pullback, now is a good time for investors to buy this cloud computing stock. It could jump impressively in the long run thanks to the growing demand for AI services in the cloud.

1 No-Brainer AI Stock Down 27% to Buy the Dip on Right Now (Hint: It's Not Nvidia)

There's no question that 2025 has been a rough year for AI stocks thus far. Pressure from the trade war, high valuations in the sector, and signs that demand may be slowing have all weighed on these fast-growing stocks as nearly all are down year-to-date. As of April 25, the Nasdaq Composite was down 11% for the year, and in a bear market, according to some definitions. However, seasoned investors know that these sell-offs present buying opportunities, and one of the most attractive right now is Taiwan Semiconductor Manufacturing (TSM 0.57%), which is trading down 27% from its peak earlier this year. All about TSMC Taiwan Semiconductor Manufacturing, often known as TSMC, is the world's biggest contract semiconductor, handling more than 50% of contract chip production in the world, and an estimated 90% of contract production for advanced chips. TSMC is now one of the most valuable companies in the world, and it's the company that tech titans like Apple, Nvidia, Broadcom, Advanced Micro Devices, and Qualcomm, among others, making it a linchpin in the global technology supply chain. Because of its advanced chip-making capabilities, it's also a major player in artificial intelligence (AI). TSMC today TSMC has delivered impressive growth through the AI era, and the company benefits from significant competitive advantages in capacity, expertise, technology, and customer relationships. In its recently released first-quarter earnings report, revenue jumped 41.6% to $25.5 billion even as the company dealt with the fallout from an earthquake in January, and operating income clocked in at $12.4 billion, giving it an operating margin of 48.5%. Management noted a sequential slowdown in smartphone demand due to seasonality, but said that AI-related demand continued to grow, driven by sales of 3nm and 5nm chips. It also said that tariff policies have not had an impact on customer behavior so far. Advanced chips, defined as 7nm or less, made up 73% of the company's revenue in the first quarter, showing its strength in advanced technologies. Additionally, 59% of its revenue came from high-performance computing, representing the kind of AI applications that partners like Nvidia turn to TSMC for. TSMC's growth strategy Based on the explosion in AI demand and TSMC's impressive revenue growth, it's clear that there's plenty of growth potential for the company, especially as demand for semiconductors should expand over the long term as semiconductors work their way into more products and the tech frontier pushes forward. Because of the need for semiconductors and concerns about geopolitical tensions around Taiwan, where the company is based, TSMC is building several new plants around the world, including in the U.S., where it's seen as an attractive manufacturing partner. TSMC was a big winner under the CHIPS Act passed under the Biden administration, and the Trump administration and TSMC recently announced that the company would invest $100 billion in the U.S. in chip manufacturing. If TSMC can geographically diversify its manufacturing base and adequately grow its capacity, the company's competitive advantages should become even stronger over the coming years. Why TSMC is a no-brainer buy TSMC is a dominant tech company with a long runway of growth ahead of it and sustainable competitive advantages. However, the stock also trades at a surprisingly low valuation for a company of its stature at a price-to-earnings ratio of just 21, meaning it trades at a discount to the S&P 500. That seems to reflect investor nervousness around geopolitical tensions in Taiwan, but it's in the interest of both the U.S. and China to avoid a military conflict around the island, and even during the trade war, there's been no hint of potential military aggression. Additionally, the semiconductor sector is cyclical, and it would be sensitive to a lasting trade war or a global recession. However, those risks seem to be more than priced in at the current valuation. Over the long term, given its growth potential, competitive advantages, and low valuation, TSMC looks like an easy winner.

These 2 Artificial Intelligence (AI) Chip Stocks Could Soar 50% to 112% in the Next Year, According to Wall Street | The Motley Fool

This has been a difficult year for semiconductor stocks, which is evident from the 23% decline in the PHLX Semiconductor Sector index so far. Investors have decided to book profits and preserve capital owing to the uncertainty caused by the tariff-fueled trade war. This, in turn, has led to an increase in the possibility of a global recession. However, recent developments suggest there could be a reason for investors to remain optimistic. These include the 90-day pause in reciprocal tariffs to allow time for negotiations between the U.S. and its trade partners, the exemption of duties on imports of semiconductors, computers, processors, and some other electronic items, and news that the U.S. and China are engaged in trade negotiations. Favorable trade deals between the U.S. and its trading partners could bring the stock market out of the rut it is in. Moreover, disruptive trends such as artificial intelligence (AI) are here to stay thanks to the massive productivity gains they can deliver in the long run. That's why now would be a good time for savvy investors to take a closer look at a couple of top semiconductor stocks that have pulled back of late but have the potential to fly higher in the next year -- and in the long run thanks to the massive AI-driven opportunity they are sitting on. Shares of Broadcom (AVGO 2.21%) have retreated 28% in 2025, and that drop doesn't seem justified in light of the company's remarkably solid growth in recent quarters. Not surprisingly, analysts are upbeat about Broadcom's performance on the stock market in the coming year. The shares carry a 12-month median price target of $250 as per 44 analysts covering the stock, which points toward potential gains of 50% from current levels. Also worth noting here is that 89% of analysts covering Broadcom recommend buying it. That isn't surprising considering the impact of AI on the company's business. The company's AI revenue increased an impressive 77% year over year in the first quarter of fiscal 2025 (which ended on Feb. 2) to $4.1 billion. That was faster than the 25% growth in the company's overall quarterly revenue, which landed at $14.9 billion. AI, therefore, is now producing 27% of Broadcom's top line. Importantly, AI chips are likely to move the needle in a bigger way for Broadcom going forward as the company's custom processors are in tremendous demand from cloud hyperscale customers. Broadcom is expecting a 44% year-over-year increase in its fiscal Q2 AI revenue to $4.4 billion. However, don't be surprised to see the company doing better than that as more customers are expressing interest in its custom AI chips. Each of Broadcom's existing three hyperscale cloud customers is expected to deploy AI server clusters powered by more than 1 million of its custom AI chips, known as XPUs, over the next three years. Management says that "these three hyperscale customers will generate a Serviceable Addressable Market or SAM in the range of $60 billion to $90 billion in fiscal 2027." Considering that Broadcom is in the final stages of the development of custom AI accelerators for two more hyperscale customers, its AI-driven addressable market should ideally become bigger. Even better, Broadcom's AI-focused customer lineup is about to get bigger as "two additional hyperscalers have selected Broadcom to develop custom accelerators to train their next-generation frontier models." So, the company could eventually sell its AI chips to a total of seven cloud hyperscale companies in the future. That could open up the possibility for exponential growth in the company's AI revenue from fiscal 2024 levels of $12.2 billion. Its addressable market from the current three customers is quite huge already. All this explains why analysts are expecting Broadcom's earnings to jump by an impressive 36% in the current fiscal year to $6.64 per share. However, Broadcom delivered stronger earnings growth of 45% in fiscal Q1, suggesting that it has the potential to beat Wall Street's expectations, especially considering the new AI customers that it is bringing on board. So, investors looking to add a top AI stock to their portfolios right now would do well to buy this chip designer before it starts flying higher. Marvell Technology (MRVL 2.77%) is Broadcom's competitor in the custom AI chip market, and shares of the company have slipped a massive 55% this year. As a result, Marvell is now trading at just 22 times trailing earnings. Buying this chip stock at this valuation is a no-brainer given its phenomenal growth. After reporting 27% year-over-year growth in fiscal 2025's Q4 (which ended on Feb. 1), Marvell is expecting its fiscal 2026 Q1 revenue to jump at a greater pace of 61%. Meanwhile, it is expecting earnings to jump by more than 2.5 times from the year-ago period. This tremendous growth makes it clear why Marvell's 12-month price target of $105 as per 39 analysts covering the stock points toward a potential jump of 112% from current levels. What's more, 92% of the analysts suggest buying Marvell stock, which is not surprising considering its red-hot growth. Importantly, its growth seems sustainable going forward. Marvell is the second-largest player in the custom AI chip market after Broadcom, with the latter controlling an estimated 70% of this space. However, analysts are expecting both companies to be on equal footing in the future, driven by Marvell's recent wins in the custom AI processor market. Marvell currently has two high-volume customers for its custom AI chips, and the good part is that it is expecting both customers to expand the adoption of its processors. Also, management pointed out on the company's March earnings conference call that it is on track to start production of custom AI chips for a third customer in 2026. The company points out that this third customer can drive "a very significant amount of incremental revenue for Marvell over the next several years." What's more, Marvell is pushing the envelope on the product-development front. The company is working with its foundry partner TSMC to roll out custom AI processors and connectivity chips made using a 2-nanometer (nm) manufacturing process. The two companies have already developed a working sample of the 2nm silicon, according to an update issued last month. This could give Marvell an advantage over Broadcom considering that the 2nm chip samples of the latter are expected in June this year. So, the possibility of Marvell gaining ground in the AI chip market is definitely solid. All this explains why analysts are expecting remarkable growth of 79% in the company's earnings in the current fiscal year, which could indeed help this semiconductor stock deliver the remarkable returns that it is expected to deliver over the next year. Throw in Marvell's cheap valuation, and it is easy to see why it would be a good idea to buy this stock hand over fist following its big drop this year, as it may not be long before it regains its momentum thanks to its outstanding AI-fueled growth.

2 Cheap Tech Stocks to Buy Right Now | The Motley Fool

These once high-flying tech stocks have had their wings clipped in 2025. Tech stocks have taken investors on a wild ride in 2025, with tariffs, interest-rate jitters, and a new presidential administration fueling market volatility. But while many are running for the exits, savvy investors know that short-term chaos can create long-term opportunity. Here are a few of those stocks -- trading at significant discounts -- that are worth a closer look while Wall Street catches its breath. AppLovin (APP 3.39%) provides technology and tools to help mobile app developers effectively market, monetize, and grow their apps. The stock trades recently traded around $270 per share and has increased by more than 300% since its initial public offering in 2021. Yet the stock is down roughly 23% in 2025, in part due to the investigative investment firm Muddy Waters Research releasing a short report on the company claiming that AppLovin appears to be violating the platforms' terms of service. As a result, Muddy Waters believes AppLovin could lose business to competitors, claiming a 23% client churn rate in the first quarter 2025. AppLovin CEO Adam Foroughi pushed back against the short report, describing it as "littered with inaccuracies and false assertions." Foroughi emphasized that the company operates in full compliance with App Store policies and stressed that its business is "based on transparency and integrity." AppLovin delivered strong financial results in 2024, generating $4.7 billion in revenue and $2.1 billion in free cash flow -- marking year-over-year increases of 43.4% and 100%, respectively. The company has been putting its free cash flow to work by buying back stock, reducing its shares outstanding by 10% over the past three years. As of the end of 2024, it still has $2.3 billion remaining under its share repurchase program. AppLovin's valuation may look steep at first glance -- trading at 43.6 times free cash flow -- but high multiples are par for the course in the world of tech and growth stocks, where investors pay for future potential. What makes AppLovin stand out is its rapid growth: With free cash flow doubling in 2024, the premium looks far more palatable. Plus, the stock is currently trading about 50% below its peak price-to-free cash flow multiple, making this high-growth company look like a bargain. Arguably, at this stage of the artificial intelligence (AI) boom, Nvidia (NVDA 4.11%), a chip supplier, has been the largest beneficiary. It provides the ecosystem of software and materials to support AI development. After its stock skyrocketed over the past few years, Nvidia briefly became the world's most valuable publicly traded company. Since then, the stock has cooled to $104 per share, falling more than 30% from its peak of $153 per share. Despite the price fluctuations, the business is humming along. In fiscal 2025, Nvidia generated $130.5 billion in revenue and $72.9 billion in net income, representing an incredible increase of 114% and 145%, respectively, compared to fiscal 2024. One reason for the recent dip in Nvidia's stock is growing uncertainty around tariffs, which could pressure the company's high gross margin. Nvidia's gross margin, a key indicator of cost efficiency and pricing power, stood at 78.4% in fiscal Q1 2025, but management expects it to decrease to between 70.6% and 71% in fiscal Q1 2026. If that projection holds, it would mark the fourth consecutive quarter of margin contraction. Addressing the issue during the company's February earnings call, CFO Colette Kress acknowledged the uncertainty around tariffs, saying, "It's a little bit of an unknown, it's an unknown until we understand further what the U.S. government's plan is, both its timing, it's where, and how much." For a mature company like Nvidia, the price-to-earnings (P/E) ratio remains a widely used valuation tool, measuring a company's stock price relative to its earnings over the past 12 months. Currently, Nvidia trades at 35.6 times trailing earnings -- a figure that might seem steep to traditional value investors. However, when considering the forward P/E ratio, which reflects expectations for the next 12 months of earnings, the valuation appears far more attractive at 23.6 times earnings. Looking further ahead, Nvidia CEO Jensen Huang's long-term optimism surrounding the AI revolution helps support the company's valuation. On the company's most recent earnings call, Huang outlined a sweeping vision for the role of AI, stating: Every fintech company will [use AI]. Climate tech companies use AI. Mineral discovery now uses AI ... every higher education, every university uses AI, and so I think it is fairly safe to say that AI has gone mainstream and that it's being integrated into every application. Whenever the market turns turbulent, growth stocks are often the first to take a hit -- and that's exactly what investors are seeing now. Both AppLovin and Nvidia have delivered explosive growth in recent years, resulting in premium valuations. But with the latest pullback, investors finally have a rare chance to scoop up shares at far more reasonable prices. Given the long-term tailwinds behind mobile advertising for AppLovin and the surge of AI for Nvidia, this moment of market uncertainty could end up being a prime opportunity for investors who can look beyond the next few quarters and focus on the long term.

1 Incredible Artificial Intelligence (AI) Stock Down 29% to Buy Right Now | The Motley Fool

This tech giant has several long-term advantages and clear opportunities to use AI to improve its business. Artificial intelligence (AI) stocks have been some of the hardest hit by the current sell-off in the stock market. With tariffs potentially increasing the cost of AI infrastructure and increasing fears of a recession, the big bets tech companies are making are set to get more expensive with less potential payoff. That's a recipe for the massive AI spending among these businesses to become a huge drag on profits over the next few quarters. As a result, many of the leading AI stocks have seen their stocks fall well over 25%. The economic landscape remains uncertain, and policies are changing nearly every day. In times of uncertainty, buying into strong companies with clear competitive advantages has provided excellent returns for investors over the years. One AI leader stands out as a stock to buy, sitting 29% below its all-time high reached earlier this year as of this writing. Here's why investors should consider adding Meta Platforms (META 2.65%) to their portfolio right now. Meta is one of a handful of "hyperscalers," companies building out massive data centers full of GPUs focused on expanding compute power for AI training and inference. Unlike most other hyperscalers, though, Meta doesn't operate a public cloud platform, where it rents out compute to other companies developing AI-powered applications. That's a significant advantage in the face of uncertainty. Meta doesn't have to worry about how cloud customers will change their spending habits in the near term. It can focus on its long-term goals and spend on what it needs to make the best possible product going forward. As such, it can ensure high utilization rates for its capital investments. That's not to say Meta's completely insulated from an economic slowdown. Its main source of revenue is advertising. If consumers are spending less, advertisers will spend less. But it's worth pointing out Meta has historically proven more resilient than other advertising channels in the past. That's thanks, in large part, to having a much broader audience than anyone else on the internet and its ability to target specific groups of that audience at the right time in the right place. That's incredibly valuable to advertisers looking to make the most of a limited ad budget in a tough economic environment. And investments in AI help improve that over time. But Meta has a ton of opportunities that its artificial intelligence spending and development can help unlock. While Meta's been working on AI algorithms for its newsfeed and other products for well over a decade, it recently started making a significant leap in AI capabilities. With the introduction of Reels, its competitor to TikTok, Meta had to rework its recommendation algorithm. The company found that the more generalized the algorithm, the more engagement from users. Meta previously ran into a scaling problem as it tried to generalize recommendations. However, using learnings from its large language model development, it's been able to expand the scale of recommendations across Reels, Stories, feed content, and more. As such, it's been able to increase engagement, which means more ad views. But on top of that, it's also been able to increase the relevancy of ads, which means more ad clicks, which means marketers are willing to pay more per ad. Meta's also incorporated more and more generative AI features into its ad-buying tools. Its Advantage+ campaigns will help optimize ad creatives for specific marketing goals. Four million advertisers were using the feature as of the end of January, and that could scale quickly as the AI improves. AI-optimized ad campaigns could result in more advertisers spending more on ads while spending less on creating the actual ad campaigns. But more valuable ads are just the tip of the iceberg for AI's potential at Meta. Meta's also working on its own AI chatbot, Meta AI. The goal is to develop it into a 1 billion-user product. It's already passed 700 million users as of the end of January. Once it reaches scale, Meta could monetize the app through more personalized features. Meta's using the same foundation to create AI agents for businesses within Messenger and WhatsApp. These agents could help with customer service and sales, allowing businesses to scale quickly and adjust to seasonality without the need to manage a human workforce. AI agents could drive revenue through click-to-message ads on Facebook or Instagram or via increased WhatsApp for Business spending. Another potential use case for generative AI for Meta is using AI-generated content on its platform. It's already experimented with some content in Instagram and Facebook feeds designed to draw users into its AI chatbot. But quality AI-generated content could ultimately increase engagement and time spent on the apps, giving Meta more advertising opportunities. While Meta faces some risk of an economic slowdown impacting its financials, the risk is mitigated by its position in the advertising market and other growth opportunities. As such, investors have a great opportunity to buy the stock now at an absolute bargain price. Shares currently trade for a price-to-earnings ratio of less than 22. That's well below its average valuation. That's despite all of the potential growth to come in the future. Analysts appear concerned about how much AI spending will eat into profits this year. Depreciation expense from previous capital investments will start to eat into operating margin this year as expenses grow faster than revenue. Nonetheless, Meta should produce positive earnings-per-share growth, helped by its massive share repurchase program. The year 2026 should see much stronger results for Meta as it grows into its AI budget. Investors who can maintain a long-term outlook should see a lot to like about Meta and its position in artificial intelligence. With the stock trading well below its all-time high, now's a great opportunity to buy shares.

2 Top Artificial Intelligence Stocks to Buy While They're on Sale | The Motley Fool

There's a lot of uncertainty for the economy, but sticking with top artificial intelligence (AI) companies still seems like a good investment. The productivity gains from adopting this technology will continue to attract investment by leading companies and drive returns for investors over the next decade. Amazon (AMZN 1.35%) and Meta Platforms (META 2.65%) are two leading tech companies that are well positioned to benefit from AI. Here's how these companies are benefiting from this technology and why it could benefit their share prices over the long term. Shares of Amazon have fallen 31% from recent highs. Tariffs and the resulting higher prices for imported goods could hurt consumer demand for the leading online retailer. But the near-term pressure on retail sales could pale in comparison to the opportunities to reduce costs and grow profits with AI. Last year, Amazon's revenue grew 11% to reach $638 billion, mostly driven by double-digit growth in non-retail services including Amazon Web Services and advertising. Its net income nearly doubled to $59 billion. AI is helping Amazon better optimize inventory placement and delivery routes, which are helping reducing costs and boost profits. It also uses robotics to streamline order processing in its warehouses. These are long-term investments that could lead to significant cost savings and earnings growth. It has been pushing toward same-day delivery for several years, but there is still a lot of room for improvement. Amazon is offering drone deliveries in a few areas with plans to roll it out in more cities over time. It can deliver packages to customers in under an hour. The long-term benefit of achieving faster delivery speeds is higher purchase frequency. More frequent sales lead to higher inventory turnover, which can boost Amazon's cash flow. Sure, a recession could pressure Amazon's business this year. But the stock is trading at an attractive valuation. Analysts expect the company's earnings to grow at an average annual rate of 20% in the years to come. Investors could see solid gains on their investment from these depressed share prices. Fears of a recession are also impacting the stocks of leading advertising companies. Instagram owner Meta Platforms has seen its share price fall 15% this year. It's one of the leading digital advertisers, with more than 3.3 billion people using one of its services every day. The last time the advertising market slowed was 2022, which sent Meta's stock down 64%. The stock has since skyrocketed 311%. Meta can struggle to deliver strong growth when the economy is down, but that's when investors can buy shares at lower prices that undervalue the company's future growth. Meta Platforms is operating in a $700 billion digital ad market. Meta posted impressive growth last year, with revenue and earnings up 21% and 60%, respectively. This strong performance came during a year when the company launched Meta AI, a highly intelligent assistant that has already been used by more than 700 million people. Meta is also using AI to more optimally place the right ads in front of users. Meta's Andromeda machine learning system, which it developed in partnership with Nvidia, can analyze millions of ads to find the right one to show on its platforms. The past year has shown how AI can boost engagement across the company's family of apps, while also helping advertisers increase their return on investment and target the right users. The company's massive user base and solid financials, with net income of $62 billion last year, make this a top tech stock to bet on for the long term. Analysts expect the company's earnings to grow at an average annual rate of 14% in the coming years, yet the stock trades at just 21 times earnings.

2 Artificial Intelligence Stocks to Buy With $2,000 | The Motley Fool

The stock market has gotten off to a rocky start this year, but market volatility is a small price to pay for the large gains of holding shares of a great business over many years. If you put your money in the right growth stocks, you can build wealth that lasts for generations. Consider that Coca-Cola has been around since 1886, yet its stock is still hitting new highs in 2025. If you have $2,000 extra cash you don't need for other life priorities, putting that cash to work in shares of leading artificial intelligence (AI) companies could be very rewarding over the next decade and beyond. The following AI stocks would make solid additions to a well-rounded portfolio of growth investments. Companies are in the process of investing substantial sums in AI. ServiceNow (NOW 0.74%) is a leader provider of AI software that helps businesses streamline workflows and increase operating efficiency. It is used by leading companies, including the U.S. government, and it continues to see strong demand. The company just announced another quarter of strong growth that has the stock moving higher. ServiceNow's subscription revenue grew 19% year-over-year in Q1, exceeding expectations. Wall Street was fearful that uncertainty in the economy would weigh on near-term investment in software, but ServiceNow's momentum isn't slowing. It closed 72 deals over $1 million in net new annual contract value. It is positioning to be a leader in agentic AI. AI agents are super-intelligent assistants that can take a request by the user and complete a series of tasks to solve a problem. Demand for advanced AI features drove a 150% year-over-year increase in the number of deals for ServiceNow's Pro Plus AI offerings last quarter. ServiceNow also seems well positioned to benefit from potential new deals in its federal government business, where it has more than 1,700 federal and public sector customers. The Trump administration's goal to increase government efficiency certainly plays to ServiceNow's capabilities. Its U.S. public sector revenue grew over 30% year-over-year in Q1, including one new customer in the federal government. What's clear is that ServiceNow is emerging as a go-to solution for leading organizations wanting to use AI to improve productivity and modernize operations. The need to reduce costs and improve efficiency is becoming more urgent than ever. As each company adopts AI solutions, it leads to a domino effect where other companies are basically forced to adopt similar solutions to stay competitive. This is fueling ServiceNow's momentum. The stock popped 23% following its Q1 earnings results, but it's still trading more than 30% from its recent highs. Investors could split their $2,000 and buy one share of ServiceNow. Analysts are projecting the company's earnings to grow at an annualized rate of 30%, which could fuel handsome gains for investors over the next several years. The demand for AI software also fuels growth for leading suppliers of advanced computing chips. Training applications to solve problems without human input requires substantial investment in graphics processing units (GPUs) for AI training, and Nvidia's (NVDA 4.11%) GPUs are the gold standard. Nvidia has been the leader in GPUs for many years. As the leading supplier of very pricey chips, it is a highly profitable business, with $73 billion in trailing-12-month net income. It has growing resources to invest in innovation to remain the leader for years to come. Nvidia's chips were the popular choice the past few years that helped train the AI for OpenAI's ChatGPT and other popular AI models. Cloud giants like Amazon Web Services and Google Cloud are some of Nvidia's top customers. Nvidia's new Blackwell chips are in high demand, with analysts expecting the company's revenue to increase 55% to $201 billion this year. Annual spending on data center infrastructure, which is Nvidia's largest addressable market, is expected to reach $1 trillion in the coming years, according to Dell'Oro Group. But CEO Jensen Huang believes that the market for GPU-based computing systems could be hundreds of billions, if not trillions, of dollars. That's based on the idea that every company and industry will one day run on AI. Analysts expect Nvidia's earnings to grow more than 35% per year over the next several years. Yet investors can currently buy the shares for 22 times this year's consensus earnings estimate. That's modest for a company growing at these rates. Investors who split their money between ServiceNow and Nvidia will own shares of two dominant AI companies on the software and hardware side and will be in a great position to profit from the growth of AI.

3 Growth Stocks Down 30% or More to Buy Right Now | The Motley Fool

Pinpointing strong bargains in the stock market is key to success, and the market is full of them right now. While some may be concerned about tariff effects in the short term, most of these stocks have incredibly bright long-term outlooks. By shifting your focus from the next few months to the next few years, you can ignore some of today's events, and it will be obvious which stocks are great buys now. Three companies that are down more than 30% from their all-time highs and look like excellent buys are Nvidia (NVDA 4.11%), Taiwan Semiconductor (TSM 0.57%), and ASML (ASML 0.38%). These three also represent a great picture of the AI chip value chain, and as long as AI continues to be an area where businesses invest, these three will succeed. As a quick overview of the supply chain, Nvidia places Taiwan Semiconductor's chips in its GPUs (graphics processing units), which have been the primary computing unit deployed by the AI hyperscalers. To make these chips, Taiwan Semiconductor needs specialized machines from ASML known as extreme ultra-violet (EUV) lithography machines. No company in the world has EUV technology besides ASML, so its engineering dominance has earned it a technological monopoly. As the demand for Nvidia GPUs rises, so does the need for more Taiwan Semi chips. Increased chip demand requires more production capacity, which means more ASML EUV machines. Again, this requires AI demand to continue rising, which seems to be the way that it's heading. Nvidia CEO Jensen Huang stated at its 2025 GTC event that data center buildouts will increase from about $400 billion in 2024 to $1 trillion by 2028. Considering that Nvidia's trailing 12-month total data center revenue was $115 billion, it gets nearly a third of all data center spending. That's a huge chunk of the market, and if Nvidia can maintain that percentage, it will deliver monster growth over the next few years. This also jives with what Taiwan Semiconductor's CEO, C.C. Wei, has been saying. For 2025, they expect revenue from their AI-related chips to double. Additionally, over the next five years, they expect AI-related revenue to grow at a 45% compounded annual growth rate, which would be an incredible achievement. While investors can speculate whether these projections are valid, the reality is that these two CEOs are better connected to the demand than almost anybody else. While they can still make mistakes, the odds of getting this information completely wrong are unlikely. As a result, investors need to take refuge in the fact that there is still a massive AI buildout going on, and this trend will be unlikely to be disrupted over the next five years unless a severe economic collapse occurs. I don't think that's likely, which makes these three stocks intriguing considering their sale prices. While these stocks used to be highly valued, they aren't that way anymore following the sell-off. ASML is the most expensive stock on the list at 24.4 times forward earnings, but those projections don't include ASML's recently announced plan to repurchase up to 10% of its stock. This could be a huge boost for the stock, making it even cheaper than it currently appears. Nvidia at 23 times forward earnings is a no-brainer, as the growth it's expected to achieve over the next few years is quite impressive. Lastly, Taiwan Semiconductor is a steal at these levels because the broader market (as measured by the S&P 500 (^GSPC 0.74%)) trades for 19.8 times forward earnings. TSMC is expecting market-beating growth over the next five years, so buying it at a discount to the market is a great investment opportunity. These three may be hurting, but the long-term outlook is still clear. All three of these stocks look like excellent bargains, and investors should scoop them up while they're still cheap.

2 Magnificent AI Stocks Down 27% and 32% That Investors Will Wish They Bought on the Dip | The Motley Fool

Investors generally dislike uncertainty, and amid a macroeconomic environment that has become far less predictable over the past few months, the entire market has become increasingly volatile. Between that and the company-specific risks they face, Alphabet had fallen by 27% from its high and Meta Platforms had lost 32%, as of April 22. The potential outcomes of the cases against those companies could include regulators forcing them to sell or spin off key business assets. That said, shying away from these top artificial intelligence (AI) companies now could prove to be a mistake for investors. Here's why investors may want to buy this dip on Alphabet and Meta Platforms. Alphabet and Meta Platforms are among the world's most powerful technology leaders. Each generates billions of dollars in annual ad revenue from its core businesses. Alphabet dominates the internet with its Google search engine and software ecosystem, while Meta's social media apps, including Facebook, Instagram, WhatsApp, and Threads, collectively reach 3.35 billion daily active users. However, antitrust regulators have stepped in due to those companies' strangleholds on their respective niches within the tech sector. Alphabet has already lost two antitrust cases, one involving Google Search and another relating to its anticompetitive practices in online advertising. Now, Alphabet and regulators will argue in court, and judges will determine what actions Alphabet may need to take to remedy its violations. Alphabet may be ordered to sell its Chrome web browser, or to cease paying Apple the billions of dollars a year it spends in the deal that has made Google the default search engine on iPhones' Safari web browser. Meanwhile, the Federal Trade Commission's antitrust case against Meta Platforms over its aggressive tactics to either acquire rivals like Instagram and WhatsApp or eliminate them is just starting. If the company loses, some speculate that it may be ordered to spin off or sell those apps. The idea of a breakup is scary, but investors could be overreacting to the headlines. Both companies have layered multiple products and services to build technology ecosystems with powerful network effects. Suppose the courts blocked Alphabet from paying Apple for search engine placement on its Safari web browser. Now, Alphabet decided it was worth paying tens of billions a year to make Google the default search engine in Apple's Safari browser. Still, it is unlikely that Google Search would collapse if that arrangement were to end. Safari is just one of Google's many distribution channels, and has only a 17.5% share of the world's web browser market. Google's Chrome is the global leader, with a 66% share. Even if Alphabet were to sell or spin off Chrome, it is tightly integrated with Google's productivity apps, such as Gmail and others. In other words, it would be difficult to eliminate the network effects Alphabet benefits from unless regulators dismantle the company. That seems unlikely given how complicated it would be. Meanwhile, the Chrome unit on its own could struggle to generate revenue without its Google connection, as it's a free product. The situation around Meta is a little trickier because there aren't as many layers to its ecosystem. If it had to sell Instagram, WhatsApp, or both, that would be a sizable blow to its empire. The good news is that while Meta has leveraged its family of apps to boost each other, such as by letting users cross-post from Instagram and Facebook to Threads, the big three apps -- Facebook, Instagram, and WhatsApp -- still function independently of each other. Therefore, Meta losing one wouldn't necessarily diminish the others. A spinoff would leave Meta smaller, but could also unlock shareholder value if an independent, publicly traded Instagram or WhatsApp thrives. The antitrust risks are real, but investors shouldn't panic. There is no rush to act, especially when each company's AI efforts might create new core businesses down the road. The AI trend could someday be the more important catalyst for both companies, and that seems unlikely to change regardless of how things turn out with these antitrust cases. Experts such as those at PwC believe AI technology could create a multitrillion-dollar economic opportunity over the next decade and beyond. Alphabet's AI opportunities include: Meta doesn't own a public cloud platform, but it does have: The dips in these stocks have left them trading at reasonably compelling valuations. Alphabet trades at a price/earnings-to-growth (PEG) ratio of just 1.2, and Meta's is 1.4. True, the generally agreed upon view is that a stock is fairly valued with a PEG ratio of 1, and lower is better. And sure, there are some potential risks to be wary about with both of these tech giants. But would an investor be better off buying shares of Walmart, a mature business trading at almost 40 times earnings and at a PEG ratio of 5.1? I don't expect Walmart's stock to outperform either Alphabet or Meta Platforms over the next five years unless there is a dramatic decline in the tech companies' growth and competitive advantages. It can be easy to get overanxious about investment risks when the markets are already shaky. However, in the cases of Meta Platforms and Alphabet, it's way too early to panic about what these antitrust cases could mean, and even aggressive court-mandated remedies could benefit shareholders. With that in mind, I'd recommend tuning out the noise and taking a long-term view on two of the world's most powerful technology companies.

2 Under-the-Radar AI Stocks With Market-Beating Potential | The Motley Fool

The market is not favoring artificial intelligence (AI) stocks right now, as it is trying to de-risk itself by selling off the high-growth names that need prime economic conditions to succeed. This has opened up an opportunity to snag some of the top-performing AI stocks at a huge discount, and if you're patient, these stocks could easily crush the market over the next few years. Two that I think have this potential are SoundHound AI (SOUN 1.39%) and The Trade Desk (TTD 1.33%). Each of these stocks is well off its all-time highs, but if each can report a strong string of solid quarterly results, they could easily climb back to their all-time highs. SoundHound AI was a darling AI stock in 2024. It rose more than 800% in the year, although it was up more than 1,000% at its peak. It is focused on using audio inputs for AI models, as there are many applications where text input isn't possible. Two of its biggest focus areas are digital assistants in cars and drive-thru automation. It also has healthcare, insurance, and finance products. SoundHound AI put up incredible growth in 2024, which is why the stock was up so much. To end the year, it put up 101% revenue growth to $34.5 million in Q4. That's impressive, but what was even more encouraging was SoundHound AI's 2025 revenue guidance. Management expects $157 million to $177 million in revenue this year, indicating 97% growth. That's some impressive growth, but we'll need an update from the management team during its Q1 results to understand if this guidance is affected by any drop in economic activity caused by tariffs. If this projection is still valid, it could result in strong stock performance from SoundHound AI. Furthermore, SoundHound has a $1.2 billion revenue backlog on its books. This isn't guaranteed revenue, but it gives investors an idea of how large some contracts it has signed are. SoundHound estimates that this backlog stretches out for about six years, although not every contract is set to expire in that time frame. So, investors can be confident that if SoundHound converts most of this backlog to revenue, there will be plenty of growth past its current impressive 2025 projections. SoundHound AI has a long way to go before returning to its all-time highs, but if it continues growing at its current pace, it won't be long before it does. A series of unfortunate events has hit The Trade Desk. Starting on Feb. 12, it missed revenue guidance for the first time in company history, which caused the stock to sell off more than 30% the following day. The miss was caused by transitioning the rest of its clients from an old platform to a new one, which caused The Trade Desk to miss out on some revenue during the quarter. This massive drop came only days before the broader market hit its all-time high and steadily declined to the point that we're at now. Currently, The Trade Desk sits 65% below its all-time high, and it looks like a steal at these levels. The Trade Desk is part of the digital advertising marketplace and assists buy-side parties in placing their ads in the most opportune spots. This includes places like podcast audio and connected TV, which are two emerging and important locations for the company. The runway for this ad-buying software is massive, as the global ad market is huge, and there is still a large transition occurring between linear TV and connected TV, where ads can be tailored to the viewer. Wall Street analysts expect strong growth from The Trade Desk over the next few years, with revenue expected to grow 17% in 2025 and 20% in 2026. As a result of its strong growth expectations, the stock trades for a fairly attractive forward price-to-earnings (P/E) ratio. While 27 times forward earnings isn't as cheap as some stocks in the market, it is the lowest level at which we have data for The Trade Desk trading. With long-term tailwinds blowing in favor of The Trade Desk's business model, I'm confident that the price investors are paying today is a bargain, and it has market-beating potential moving forward.

When You Look Back in a Few Years, You'll Wish You'd Bought This $2 Trillion Artificial Intelligence (AI) Stock | The Motley Fool

Alphabet (GOOGL 1.70%) (GOOG 1.52%) is the parent company of Google, YouTube, self-driving mobility developer Waymo, and artificial intelligence (AI) lab DeepMind. It's one of just four companies in the world with a market capitalization of at least $2 trillion, reflecting its consistent long-term growth and the quality of its brands. Alphabet is currently investing heavily in AI across its entire organization. The technology is reshaping its core businesses and creating new opportunities to generate revenue, so it could be the conglomerate's most important driver of growth moving forward. Alphabet stock is trading 19% below its all-time high amid the broader market sell-off, and because of its ongoing legal battles with U.S. regulators. However, when investors look back on this moment in a few years, they might wish they had bought the stock today. Google Search is Alphabet's most important business. During the first quarter of 2025 (ended March 31), it brought in $50.7 billion in revenue, which represented more than half of the conglomerate's total revenue of $90.2 billion. Since Google is the window to the internet with a staggering 90% market share in the search industry, businesses spend truckloads of money to advertise their products and services on the platform. There were some concerns in the past that AI chatbots like OpenAI's ChatGPT could disrupt traditional search engines, because they can deliver direct answers to practically any query. But Alphabet countered those fears by creating its own family of large language models (LLMs) called Gemini, and a chatbot with the same name. In fact, the latest Gemini 2.5 model is widely recognized as the best in the industry, so Alphabet has not only caught up to the competition, but potentially surpassed it. Alphabet is also applying its AI models to transform the traditional Google Search experience. The company launched AI Overviews last year, which combine text, images, and links to third-party sources to provide holistic responses that appear above the traditional Google Search results. This saves the user from sifting through web pages to find the information they need, and Alphabet says a whopping 1.5 billion people are already using Overviews per month. Here's the most important part: AI Overviews monetize at roughly the same rate as regular Google Search results, so they aren't cannibalizing Alphabet's golden goose. Google Cloud offers businesses a suite of digital products and services to help them transition into the digital age. However, it also has a growing portfolio of AI services that could fuel the next phase of growth for the platform. Google Cloud operates data centers filled with AI chips from leading suppliers like Nvidia, and businesses can rent the computing capacity to develop and deploy AI software into their operations. Google also designed its own chips called Tensor Processing Units (TPUs), and the latest version called Ironwood offers 10 times more computing power than the previous generation. Ironwood is specifically designed for performing AI inference, so it's ideal for next-generation reasoning models (like Gemini 2.5) which consume significantly more computing power than traditional LLMs. On that note, the Vertex AI developer suite on Google Cloud offers access to over 200 foundation models like Gemini 2.5, and those from leading third parties like Anthropic and Meta Platforms. Businesses can combine these models with their internal data to significantly accelerate the development of custom AI software for their own needs. Google Cloud generated a record $12.2 billion in total revenue during the first quarter of 2025, which was a 28% increase from the year-ago period. The platform could be doing even better because demand for its AI data center infrastructure continues to exceed supply. Alphabet allocated a record $17.2 billion toward capital expenditures during the quarter to build more capacity, and it plans to spend around $75 billion overall during 2025. Alphabet generated $2.81 in earnings per share (EPS) during the first quarter of 2025, representing year-over-year growth of 48%. The company's trailing-12-month EPS now stands at $8.97, placing its stock at a price-to-earnings (P/E) ratio of just 18.6. That makes Alphabet significantly cheaper than each of the other companies in the $2 trillion club: Ongoing regulatory issues are the main reason Alphabet is so cheap right now. The U.S. Department of Justice (DOJ) has won a couple of landmark cases since 2020, where it claimed Alphabet was monopolizing the search and advertising businesses, so investors are now awaiting the start of what could be lengthy appeals processes. If the judgements are upheld, Alphabet might be forced to sell certain assets like the Chrome internet browser or Android mobile operating system to level the playing field for competitors. That would be a worst-case scenario and would dent Alphabet's earnings power. Some tech analysts think a judge is more likely to impose a financial penalty or force the company to change its business practices instead. For example, Alphabet will probably have to stop paying billions of dollars to Apple each year to make Google Search the default option on devices like the iPhone, forcing it to win market share on merit. Alphabet could also face some headwinds from the tariffs President Donald Trump enacted on America's trading partners, and some of the retaliatory levies other countries have imposed. Alphabet primarily sells digital advertising and cloud services, which aren't directly subjected to tariffs (at least not yet), but if global trade tensions cause an economic slowdown, the company will suffer as businesses trim their spending. Hopefully, this should only be a short-term issue considering the U.S. is already negotiating new trade deals with dozens of different countries. Many of the above risks are priced into Alphabet's valuation, so if the company isn't broken up, and trade tensions are resolved, its stock could soar from here. On top of that, Alphabet is already a clear leader in the AI industry, which could be the biggest financial opportunity its search and cloud businesses have ever seen. As a result, when investors look back on this moment a few years from now, they might wish they had added Alphabet to their portfolio today.

3 Top Artificial Intelligence (AI) Stocks Ready for a Bull Run | The Motley Fool

The stock market is quietly staging a comeback following a rough start to 2025. While still down about 9% year to date as of this writing, the innovation-heavy Nasdaq Composite index has rallied by more than 16% from its recent low. Signs that the Trump administration is willing to adjust some of the sweeping changes in trade policy and negotiate bilateral deals have helped de-escalate fears of a broader trade war. There are still plenty of uncertainties for investors to balance, but also a renewed sense that the big picture remains positive. With the first-quarter earnings season underway, early results from tech leaders are showcasing underlying sector resilience and the ongoing transformative impact of artificial intelligence (AI) as a major market theme. Let's take a look at three AI stocks that could be poised to make a big bull run. Despite solid growth and record profitability, shares of Adobe (ADBE -0.29%) are down about 38% from their 52-week high. The tech giant, recognized for its industry-leading creative media software like Photoshop and Premiere Pro, is capitalizing on strong demand for innovative AI and machine learning features integrated across its app ecosystem. In the company's fiscal 2025 first quarter (for the period ended Feb. 28), revenue climbed by 10% year over year, alongside a 13% increase in adjusted earnings per share (EPS), with management forecasting further increases for 2025. The market seems skeptical as to whether Adobe's early AI success will last, as one reason to explain its stock price weakness. Specialized AI companies like privately held Canva and OpenAI have introduced competing AI-powered text-to-image and video generation features, representing emerging competition to Adobe's industry dominance. However, the company's reputation for quality and its loyal customer base, attracted to its professional-grade capabilities, provide plenty of reasons to be optimistic. Notably, the stock's valuation is compelling, trading at just 18 times its consensus 2025 EPS as a forward price-to-earnings (P/E) ratio, well below the company's five-year average forward price-to-earnings ratio. Adobe appears undervalued and well positioned to rebound if it continues to deliver on its financial targets. The company's AI strategy is paying off, driven by Google Cloud Platform (GCP), which offers AI infrastructure and generative AI solutions that are gaining market traction at the enterprise level. Alphabet's latest AI model, Gemini 2.5, is delivering breakthrough performance, translating directly into to higher advertising conversions across Google Search and YouTube. With over 270 million paid subscriptions for services like YouTube Premium and Google One, the company is diversifying its business and generating high-quality cash flow. Management's confidence in the outlook is reflected in a new $70 billion share repurchase authorization and a 5% increase in the quarterly dividend rate. With the stock still down 22% from its 52-week high, Alphabet is a buy-the-dip opportunity poised to rally higher. SoundHound AI (SOUN -1.37%) is another tech stock that deserves a closer look following a deep stock price sell-off. Shares are down approximately 52% year to date as of April 25, an extreme correction that doesn't seem justified considering the company's phenomenal growth momentum. The company is capturing strong demand for its voice-AI technology, representing a more natural and intuitive method for people to interact with AI-powered applications. In 2024, revenue reached $84.7 million, climbing 83% compared to 2023. For 2025, SoundHound expects revenue to nearly double, forecasting a range between $157 million and $177 million. The bullish case for the stock is that these trends are just getting started, with the company exploring a growing number of use cases, including hands-free in-vehicle AI car assistants, customer service chatbots, and voice-enabled ordering for restaurants. With the potential to consolidate its position in an estimated $140 billion addressable market, SoundHound AI remains well positioned to reward shareholders over the long run.

2 Artificial Intelligence (AI) Stocks That Could Make You a Millionaire | The Motley Fool

Artificial intelligence, or AI, is undeniably a massive opportunity with room for multiple big winners. Many of the most promising AI stocks have fallen out of favor recently thanks to economic uncertainty and AI spending concerns. However, this has created some excellent opportunities for patient investors to add some rock-solid AI stocks to their portfolio. While there are plenty of AI stocks that look rather exciting right now, there are two in particular that are on my radar as we head into May. I already added one of them to my portfolio, and the other is at the top of my watch list right now. Advanced Micro Devices (AMD -0.23%), which is more commonly referred to simply as AMD, is often overlooked by investors because it holds a distant-second market share in the data center graphics processing units (GPU) space to chipmaking behemoth Nvidia, which has about 95% of the space. However, there's a lot to like about the business. For example, AMD's desktop and laptop central processing unit (CPU) business has been impressively taking share from Intel for years (and it doesn't compete with Nvidia here). New models of AMD's Ryzen line of AI-optimized processors are especially promising. AMD also makes chips for mobile devices, as well as for a variety of other applications, such as gaming and autonomous vehicles. To be clear, data center chips are a big part of AMD's business and the fastest-growing part with 94% year-over-year revenue growth in 2024, but there is a lot more to this company. In 2024, the company grew revenue and earnings per share by 14% and 25%, respectively, and this momentum could continue for years to come. AMD trades for nearly 60% less than its 2024 AI boom-fueled peak -- and for about 22 times forward earnings, which I think could be a steal given the momentum and opportunities ahead. Applied Materials (AMAT -0.44%) isn't exactly a household name, but many of the products made by the top semiconductor manufacturers (including Nvidia) are produced with the company's equipment. Specifically, Applied Materials makes and services semiconductor manufacturing equipment that is used to produce and package chips. As chip designs become more complex, newer and more specialized equipment is needed to make them. For example, some of the largest chipmakers are moving to backside power delivery (moving power wires to a more efficient configuration at the bottom of a silicon wafer), and this creates an additional $1 billion estimated market opportunity for the company. Overall, the global semiconductor industry is expected to roughly double in size by 2032, so there should be nice growth tailwinds for the foreseeable future. Applied Materials is a highly profitable business with a 23% net margin over the past four quarters and has done a fantastic job of smart capital allocation, especially through buybacks. With the stock trading for just 16 times forward earnings, this proven AI winner could be worth a closer look. To be completely thorough, it's important to mention that the economic uncertainty surrounding the Trump administration's trade policy, interest rates, and recession possibilities isn't done. The same can be said for AI spending concerns. So, if you invest in one or both of these stocks, it's wise to brace for significant volatility.

Nasdaq Bear Market? 3 Artificial Intelligence Stocks Down 15% This Year. | The Motley Fool

On Monday, the Nasdaq Composite opened at 17,390.90. That's down nearly 14% from the high it reached last year at around 20,174, which means it's out of bear market territory for the time being. But it may not be out of it for good. With investors still concerned about tariffs and the state of the overall economy, it may not take much for the bears to come out in full force again. In the meantime, you may want to consider buying some promising artificial intelligence (AI) stocks amid this downturn. Three stocks that stand to benefit from AI's growth and that are down more than 15% at this writing include Nvidia (NVDA 0.12%), Arista Networks (ANET 3.29%), and Broadcom (AVGO -0.71%). The shares of chipmaking giant Nvidia have fallen close to 20% since the start of the year. There are concerns that spending on AI may not be as significant as expected given the emergence of DeepSeek and other cheaper AI models. And a trade war involving the U.S. and China could weigh on Nvidia's sales to that part of the world. A recent report also suggests that Chinese-based Huawei is looking to create AI chips to rival Nvidia's. All in all, it paints a troubling outlook for the business. But competition is nothing new for Nvidia; companies have tried to take market share away in the past. Yet it remains the dominant player in the AI chip market. There are valid concerns about slowing growth, but its reduced valuation could still make it an enticing buy. Nvidia's stock is trading at 38 times its trailing earnings, down from more than 80, which is what investors were paying for the business in the early part of last year. At a lower multiple, expectations won't be as high. And investors are probably expecting more of a slowdown simply because attaining a high growth rate (e.g., more than 50%) likely isn't going to be sustainable anyway. Some conservatism and perhaps even negativity looks to be priced into Nvidia's valuation right now, which is why this may be the optimal time to buy the AI stock, particularly if you're willing to hang on for the long haul. The stock down the most on this list is Arista Networks. It has fallen by close to 30% since the start of the year. The company plays a crucial role in the AI market as it equips businesses with the necessary networking solutions and infrastructure they need to be AI ready and to grow their capabilities. The company has achieved monstrous growth in recent years, with sales rising from $2.9 billion in 2021 to more than $7 billion this past year. It still has room for much more growth, but if the market has soured on Nvidia and AI as a whole, then it's unsurprising that Arista's stock also plummeted in value. At 35 times its trailing earnings, the stock is a little cheaper than Nvidia's, and it could make for an appealing option for investors who want a more modestly valued AI business; Arista's market cap currently hovers around $100 billion. While that's high, it's nowhere near Nvidia's multitrillion-dollar valuation. One company that recently hit the $1 trillion mark is Broadcom, but it has come down from those levels and declined 18% this year. The semiconductor company benefited from large companies -- often referred to as hyperscalers -- ramping up their AI capabilities. The danger, however, is that if that feverish AI spending slows due to a recession, that will inevitably hurt demand for Broadcom's custom-built AI chips. Broadcom is the most expensive AI stock on this list, trading at close to 90 times its trailing earnings. But when factoring in its expected growth, that multiple falls to 29 based on next year's expected earnings. Unfortunately, with a lot of uncertainty ahead, investors may not find much comfort and safety in those estimates anymore. It could be a challenge for Broadcom in the short run, but with a lot of top companies relying on its chips, including Microsoft and Oracle, it's still in a great position to benefit from opportunities in AI over the long haul.