As 2025 approaches, investors can start thinking about how they want to approach the second half of the decade. Given technology trends, stocks powered by artificial intelligence (AI) are likely to continue to thrive.
The rise of ChatGPT has contributed to this Nvidia the AI share of the first half of the decade. But as the red-hot growth began to cool, many investors switched to other stocks.
Do you miss the morning spoon? Breakfast news delivers it all in one fast, silly and free daily newsletter. Register for free »
Although it is almost impossible to predict best As they continue to perform well for the rest of the decade, investors can expect several stocks to likely deliver strong returns. Knowing this, three Fool.com employees have ideas about which stocks could deliver the sought-after profits.
Justin Pope (metaplatforms): It’s hard to overstate how remarkable a company it is Metaplatforms (NASDAQ: META) is. The company has a stranglehold on the global social media landscape: 3.29 billion people log in to Facebook, Instagram, WhatsApp or Threads every day. Social media apps are a fantastic distribution mechanism for serving digital ads, especially how Meta generates over $156 billion in (highly profitable) annual revenue.
Meta has focused heavily on artificial intelligence. The company has invested billions of dollars in data centers for computing capacity, developed a proprietary AI model (Llama), and woven AI technology into its digital advertising business to make it more effective for customers.
The appeal of the stock is twofold. First, the company’s digital advertising business makes Meta a juggernaut in its current form. Analysts estimate Meta will grow earnings 20% annually over the next three to five years.
Still, the PEG ratio of 1.3 indicates that Meta is still very reasonably priced for that growth – even at an all-time high. In other words, Meta’s growth prospects for the rest of the 2020s look good, and you’re not paying too much for it.
Secondly, Meta is continuously investing tons of money in Reality Labs, the AI and augmented reality segment. Reality Labs posted an operating loss of $11.4 billion for the first nine months of 2024. CEO Mark Zuckerberg believes it will become profitable over time; otherwise the company would not invest the money and effort.
Does that guarantee that Mark Zuckerberg is right? Of course not. Still, in recent years Meta has proven its foresight and ability to position itself for success (Instagram and Reels). The stock’s strong existing advertising business and hefty AI investments could make Meta an enduring winner, especially if Reality Labs starts to bear fruit later this decade.
Jake Lerch (SoundHound AI): My choice is Sound dog AI (NASDAQ: SOUND).
First a little background. SoundHound is a leader in voice AI solutions. The products help bridge the gap between human voices and AI models. For example, SoundHound works with car manufacturers such as Honda, Hyundai, Mercedes Benzand others to control their in-car voice chat.
In addition to its automotive partnerships, SoundHound has also made inroads into the casual dining sector. At the time of writing, the list of restaurant clients has grown to more than a dozen well-known brands, including Papa John’s, Chipotle Mexican Grilland Jersey Mike’s.
There are at least two main reasons why these high-profile companies are looking to SoundHound:
-
Many companies are focusing on reducing costs through the use of AI tools.
-
SoundHound’s voice AI tools have an edge over the competition.
What is SoundHound’s competitive advantage? In short, it has a so-called first-mover advantage. The company was founded in 2005 and its proprietary technology ensures that the tools deliver best-in-class speed and accuracy, mimicking human-to-human conversations.
Additionally, because SoundHound is not a large technology conglomerate, some customers may feel more comfortable partnering with the company. In other words, SoundHound AI offers its customers an alternative to big-tech voice AI Amazon, Appleor Google (Alphabet).
Finally, the company’s position within the ongoing AI boom bodes well for the future. As mentioned, it seems that every company is eagerly looking for opportunities to use AI tools to increase profitability. As the audience becomes more and more Being familiar with AI voice interactions, more and more industries will roll out voice AI for customer interactions.
SoundHound AI is an emerging AI stock that still has plenty of room to grow – and it’s a name investors should remember.
Will Healy (CrowdStrike): When it comes to cybersecurity stocks, CrowdStrike (NASDAQ: CRWD) can look closer to a stock to avoid. The company is still dealing with the fallout from the July 19 outage, and now that its shares have recovered most of their lost value, it appears there is little profit left.
In fact, the stock is up more than 50% in the past year, even accounting for the summer outage. Furthermore, its price-to-sales ratio (P/S) of 24 makes it a more expensive stock than its closest competitors.
Nevertheless, the malfunction can be strange increased confidence in the company. CrowdStrike quickly admitted the incident occurred and immediately issued a fix. Such a move shows that CrowdStrike cares more about its long-term reputation than its short-term performance.
Additionally, CrowdStrike has positioned itself to take advantage of the growing need for cybersecurity. Fortune Business Insights predicts a compound annual growth rate (CAGR) of 14% through 2032, amid a growing need to protect cloud and AI workloads.
CrowdStrike plans to tap more of this increasing demand with the company’s Falcon platform, an AI-native cybersecurity ecosystem. Also, the Charlotte AI security product can use simple language queries to discover hidden threats, speed decision-making, and automate error-prone tasks that can lead to security breaches.
Additionally, CrowdStrike’s numerous offerings help drive more sales from new and current customers. According to the company, 66% of customers subscribe to five or more modules. In the first nine months of fiscal 2025 (ending October 31), this increased adoption led to $2.9 billion in revenue, up 31% from the same period in fiscal 2024.
Granted, investors may not want to buy the stock as long as its valuation remains high. However, five years of sales growth will make this number less important over time, and as the company emerges from the tailspin, continued growth should lead to stock gains in the second half of the decade.
Before you buy shares in Meta Platforms, consider this:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Meta Platforms wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $872,947!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns December 2, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Jake Lerch has positions at Alphabet, Amazon, CrowdStrike and Nvidia. Justin Pope has no position in any of the stocks mentioned. Will Healy holds positions in CrowdStrike. The Motley Fool holds positions in and recommends Alphabet, Amazon, Apple, Chipotle Mexican Grill, CrowdStrike, Meta Platforms and Nvidia. The Motley Fool recommends the following options: Short December 2024 put $54 on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
3 AI Stocks to Buy and Hold for the Rest of the Decade was originally published by The Motley Fool
