Even although 2024 is drawing to an in depth and a brand new yr stuffed with surprises is upon us, synthetic intelligence (AI) will certainly stay a high precedence for traders subsequent yr.
While Nvidia is broadly thought-about the final word barometer for the well being of the AI ecosystem, I see a couple of different candidates as high funding selections for 2025.
Advanced Micro Devices (NASDAQ: AMD), Amazon (NASDAQ: AMZN), and Tesla (NASDAQ: TSLA) are alternatives to purchase hand over fist subsequent yr as AI mania continues.
Industry developments counsel that Nvidia owns a staggering 88% share of the GPU market. On the floor, such a robust foothold would possibly counsel that Nvidia merely has essentially the most superior merchandise within the market. While some clients would argue that that is very a lot the case, there’s a extra nuanced purpose for Nvidia’s dominance — specifically, an absence of competitors over the past two years basically supplied Nvidia with a first-mover benefit.
However, over the past yr or so, AMD quietly emerged as a formidable competitor within the knowledge heart GPU realm, thanks largely to its MI300 accelerators. The MI300 has been such a bellwether for AMD that its personal knowledge heart providers enterprise is rising at basically the identical charge as Nvidia’s (which has been decelerating over the previous couple of quarters).
Next yr, AMD is scheduled to launch a next-generation structure, dubbed the MI325X, which is geared towards competing with Nvidia’s new Blackwell GPUs. Furthermore, AMD’s GPU roadmap additionally features a deliberate launch in 2026 for its MI400 chipset, which is probably going a solution to Nvidia’s Rubin structure, which can also be deliberate for 2026.
While I’m not insinuating that AMD will develop into a bigger enterprise than Nvidia, the corporate’s tempo of innovation wants credit score. With that, I might simply see AMD starting to accumulate incremental market share away from Nvidia as funding in AI infrastructure continues to increase.
AMD is a screaming purchase proper now as traders look like overlooking the corporate’s progress, which is presently overshadowed by that of Nvidia.
Amazon as the only most profitable alternative amongst mega-cap tech. While Amazon’s core operations sit between e-commerce and cloud computing, the corporate additionally has a subscription enterprise (Prime), a streaming platform, and a fast-growing promoting unit. Amazon is an extremely distinctive enterprise, as its numerous mannequin permits it to sew AI-powered options throughout the corporate’s broader cloth.
Between holiday-driven purchasing developments, company budgets focusing extra on AI, and new investments in its streaming providers, Amazon appears to be like poised for a blowout fourth-quarter efficiency. On high of that, the corporate is making some notable investments in AI infrastructure — specifically within the type of homegrown chips (Trainium and Inferentia) in addition to by means of a profitable partnership with OpenAI competitor Anthropic.
Even with all of those thrilling shifting items, Amazon’s income is barely rising at 11% yearly. Although this may increasingly seem mundane, Amazon’s free money stream is rising at over 120% yr over yr, offering the corporate with heaps of money that it could use to reinvest again into the enterprise. This stage of economic flexibility is tough to match, and it is solely a matter of time earlier than Amazon begins to point out materials acceleration throughout the highest line whereas persevering with to mint income.
Amazon is a no brainer alternative for traders with a long-term time horizon.
Over the final couple of years, Tesla struggled to match or exceed historic progress ranges as demand for its electrical automobiles (EV) grew to become protracted on the heels of a troublesome macroeconomic setting.
Those days could also be within the rearview mirror, although. Perhaps the largest near-term tailwind for Tesla is its foray into autonomous driving, referred to as Full Self-Driving (FSD) expertise. While FSD has made notable progress over the previous couple of years, there’s purpose to imagine that 2025 might be the start of a generational progress narrative for Tesla’s ambitions in self-driving.
Wedbush Securities analyst Dan Ives thinks that Elon Musk’s shut relationship with President-elect Donald Trump might considerably pace up the timeline to carry FSD to widespread commercialization. Furthermore, if Trump decides to take away or change laws round EV tax credit, Tesla may benefit from such motion in the long term.
Although Tesla inventory has been hovering because the election, and shares are hovering round all-time highs, it is nonetheless a compelling alternative for long-term traders. For now, I’d warning in opposition to shopping for into the momentum and search for a extra cheap entry level ought to a sell-off happen. Nevertheless, 2025 can be a milestone yr for Tesla because of the narrative surrounding FSD, and the beginning of a brand new progress narrative for the corporate.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of administrators. Adam Spatacco has positions in Amazon, Nvidia, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Nvidia, and Tesla. The Motley Fool has a disclosure coverage.
Here Are My Top 3 Artificial Intelligence (AI) Stocks to Buy Hand Over Fist in 2025. Hint: Nvidia’s Not on the List. was initially printed by The Motley Fool
