Even though 2024 is coming to an end and a new year full of surprises is just around the corner, artificial intelligence (AI) will certainly remain a top priority for investors next year.
While Nvidia is widely considered the ultimate barometer for the health of the AI ecosystem, I see a few other candidates as top investment choices for 2025.
Advanced micro devices (NASDAQ: AMD), Amazon (NASDAQ: AMZN)And Tesla (NASDAQ: TSLA) There are opportunities to buy hand over fist next year as the AI mania continues.
Industry trends indicate that Nvidia has a whopping 88% of the GPU market. On the surface, such a strong position might indicate that Nvidia simply has the most superior products on the market. While some customers argue that this is very much the case, there is a more nuanced reason for Nvidia’s dominance: a lack of competition over the past two years has actually given Nvidia a first-mover advantage.
Over the past year, however, AMD has quietly emerged as a formidable competitor in the data center GPU space, thanks in large part to its MI300 accelerators. The MI300 has been such a game changer for AMD that its own data center services business is essentially growing at the same pace as Nvidia’s (which has declined in recent quarters).
Next year, AMD will release a next-generation architecture called the MI325X, which aims to compete with Nvidia’s new Blackwell GPUs. Additionally, AMD’s GPU roadmap also includes a planned 2026 launch for its MI400 chipset, which is likely a response to Nvidia’s Rubin architecture, which is also scheduled for 2026.
While I’m not insinuating that AMD will become a bigger company than Nvidia, the company’s pace of innovation deserves recognition. With that, I could easily see AMD starting to gain more and more market share away from Nvidia, as investment in AI infrastructure continues to grow.
AMD is a screaming buy right now as investors seem to be ignoring the company’s progress, which is currently overshadowed by Nvidia’s.
Amazon as the most lucrative opportunity among megacap tech. While Amazon’s core businesses lie between e-commerce and cloud computing, the company also has a subscription business (Prime), a streaming platform, and a fast-growing advertising unit. Amazon is an incredibly unique company because its diverse model allows it to integrate AI-powered features into the broader fabric of the business.
Between holiday-related shopping trends, corporate budgets moving more toward AI, and new investments in its streaming services, Amazon appears poised for a stellar fourth-quarter performance. Additionally, the company is making some notable investments in AI infrastructure, namely in the form of homegrown chips (Trainium and Inferentia) and through a lucrative partnership with OpenAI competitor Anthropic.
Even with all these exciting things, Amazon’s revenue is only growing at 11% per year. While this may seem mundane, Amazon’s free cash flow is growing at over 120% year over year, giving the company huge amounts of cash that it can use to reinvest in the business. This level of financial flexibility is difficult to match, and it’s only a matter of time before Amazon begins to show significant acceleration in sales while continuing to turn a profit.
Amazon is a no-brainer opportunity for investors with a long-term horizon.
In recent years, Tesla has struggled to match or exceed historic growth levels as demand for its electric vehicles (EV) has continued due to a difficult macroeconomic environment.
However, those days may be in the rearview mirror. Perhaps the biggest tailwind for Tesla in the near term is its foray into autonomous driving, known as Full Self-Driving (FSD) technology. While FSD has made remarkable progress in recent years, there is reason to believe that 2025 could be the start of a generational growth story for Tesla’s self-driving ambitions.
Wedbush Securities analyst Dan Ives thinks Elon Musk’s close relationship with newly elected President Donald Trump could significantly accelerate the timeline for bringing FSD to widespread market use. Furthermore, if Trump decides to eliminate or change regulations around EV tax credits, Tesla could benefit from such measures in the long run.
While Tesla stock has soared since the election, with shares hovering around record highs, it’s still an attractive opportunity for long-term investors. For now, I would caution against buying into the momentum and looking for a more reasonable entry point if a sell-off were to occur. Nevertheless, 2025 will be a milestone year for Tesla thanks to the FSD story and the start of a new growth story for the company.
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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 directors. Adam Spatacco has positions in Amazon, Nvidia and Tesla. The Motley Fool holds positions in and recommends Advanced Micro Devices, Amazon, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
Here are my top three artificial intelligence (AI) stocks to buy on hand in 2025. Tip: Nvidia is not on the list. was originally published by The Motley Fool
