3 Top AI Stocks to Watch in 2025: NVIDIA, AMD, and Alphabet

The AI revolution is in full swing, and investors are eager to capitalize on the growth opportunities in the AI stock market. As we approach 2025, it's essential to identify the top AI stocks that are well-positioned to benefit from the expanding AI market. In this article, we will highlight three AI stocks that are poised to make significant strides in 2025: NVIDIA Corporation (NVDA), Advanced Micro Devices (AMD), and Alphabet (GOOGL).

1. NVIDIA Corporation (NVDA):
NVIDIA is a leading player in the AI chip market, with a strong focus on AI-optimized hardware, software, and partnerships. The company's AI data center segment grew by 112% year over year in the third quarter of its fiscal 2025, driven by strong demand for its AI-focused data center platforms. NVIDIA's enterprise AI software solutions are increasingly adopted by prominent companies such as Salesforce, SAP, and ServiceNow, further strengthening its moat.

The company's latest generation of GPUs built on its Blackwell architecture is expected to be a significant growth driver in 2025. Management said on its November earnings conference call that these chips are in full production and are being shipped to customers. Blackwell-related revenue for the current quarter should exceed expectations thanks to a strengthening supply chain. The company also said that the demand is well above supply, boding well for NVIDIA going into the new year since TSMC says it will increase the production capacity of advanced AI chips significantly in 2025.

Market researcher IDC projects that TSMC is on track to double its chip-on-wafer-on-substrate (CoWoS) advanced packaging capacity to 660,000 wafers to fulfill demand from NVIDIA and other AI chipmakers. NVIDIA reportedly cornered 60% of TSMC's CoWoS capacity for 2025, so it should be able to substantially increase the output of its Blackwell processors. In October 2024, Morgan Stanley analysts said that Blackwell GPUs are sold out for the next 12 months, allowing NVIDIA to satisfy more orders and deliver a big bump in data center revenue.

2. Advanced Micro Devices (AMD):
AMD is the second-most prominent AI chip maker globally and is set to benefit significantly from the rapidly expanding AI market, with a target addressable market estimated to be worth $500 billion by 2028. AMD's data center revenue soared by 122% year over year to $3.5 billion in the third quarter, driven mainly by solid uptake of its Instinct GPUs and EPYC server CPUs. The company now expects data center GPU revenue to be over $5 billion in 2024, an upgraded estimate from the previous $4.5 billion guidance provided in July 2024.

Microsoft uses AMD's MI300X chips to power multiple copilot services, and Meta Platforms has chosen these chips to power its inferencing infrastructure at scale, especially for its most demanding open-source Llama model. AMD is also gearing up for the launch of the upcoming MI350-series GPUs scheduled in the second half of 2025. Analysts expect AMD's revenue to be around $32.56 billion in 2025, implying year-over-year growth of 26.88%.

3. Alphabet (GOOGL):
Alphabet is a formidable player in the AI space and is already earning money from its AI offerings. The company's Google Search business is expected to continue growing in 2025, driven by increased user engagement with AI-powered search features. Google Search revenue was up 12% year over year to $49.4 billion in the third quarter, representing 57% of the company's total revenue. This growth is attributed to the increased frequency and complexity of search queries, which is driven by AI-powered features.

Google Cloud is becoming a major catalyst for Alphabet, with revenue growing an impressive 35% year over year to $11.4 billion in the third quarter. Robust adoption of AI infrastructure and generative AI technologies across industries and use cases has played a pivotal role in Google Cloud's growth. This trend is expected to continue in 2025, driving further growth for the company. Alphabet's fundamentals are strong, with market leadership in the AI-powered search market and growth prospects in the cloud business.

In conclusion, NVIDIA, AMD, and Alphabet are well-positioned to capitalize on the growing demand for AI technologies and services in 2025. Their strong market positions, diverse growth catalysts, and robust financial outlooks make them compelling investments for astute investors looking to capitalize on the AI revolution. Stay tuned for more updates on these and other AI stocks as we approach 2025.