AI Stock Surges 158% in Six Months, But Faces Risk in 2025

The AI stock market has been on a tear in 2024, with one particular stock standing out from the crowd. This AI stock has surged an impressive 158% over the last six months, leaving investors wondering if the rally is sustainable and what risks lie ahead as we enter 2025.



Key factors driving the AI stock's growth
Several factors have contributed to the AI stock's remarkable performance over the last six months. Firstly, the growing adoption of AI across industries and sectors has led to a surge in demand for AI services. According to a Wharton study, the percentage of large firms using AI weekly increased from 37% in 2023 to 72% in 2024, indicating a significant uptick in AI adoption. This increased demand has driven investment in AI, with 67% of respondents expecting their organizations to invest more in AI over the next three years.

Secondly, organizations are already seeing material benefits from AI use, such as cost decreases and revenue jumps in the business units deploying the technology. This has further fueled investment in AI, with 65% of respondents reporting that their organizations are regularly using generative AI, nearly double the percentage from the previous survey just ten months ago. This increased interest in generative AI has likely contributed to the growth in AI stock values.

Finally, the growth in AI adoption has led to increased interest in AI stocks, with investors looking to capitalize on the potential of this rapidly growing industry. The McKinsey Global Survey on AI found that AI adoption by respondents' organizations jumped to 72% in 2024, up from about 50% in the previous six years. This widespread adoption has contributed to the growth in AI stock values.

The primary risk facing the AI stock in 2025
Despite the impressive growth of the AI stock over the last six months, there is one significant risk that investors should be aware of as we enter 2025. The primary risk facing the AI stock is the potential for interest rate cuts to not be as deep as expected, which could impact the company's growth prospects. According to the Federal Reserve Bank of New York, consumer credit card balances are at an all-time high of $1.17 trillion, with credit card interest rates at around 22.7%. If interest rates do not decrease significantly, consumers may not be as incentivized to refinance their debts through personal loans offered by the AI stock, which could negatively impact the company's revenue growth and profitability. Additionally, if the AI-powered lender is unable to secure sufficient funds from lending partners, this could further hinder its growth prospects.



In conclusion, the AI stock's impressive 158% gain over the last six months is a testament to the growing demand for AI services and the potential of this rapidly expanding industry. However, investors should be aware of the primary risk facing the AI stock in 2025, which is the potential for interest rate cuts to not be as deep as expected. As the AI stock enters 2025, investors should closely monitor the company's progress and be prepared to adapt their strategies accordingly.