AI Stock Trade: Beyond the Magnificent 7 in 2025

As we approach 2025, the artificial intelligence (AI) landscape is poised for significant growth and transformation. While the Magnificent 7 tech giants—Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Facebook (META), Microsoft (MSFT), Netflix (NFLX), and Tesla (TSLA)—have dominated the AI narrative, there are numerous other AI stocks that are well-positioned to soar in the coming year. In this article, we'll explore the AI market outlook for 2025 and highlight three AI stocks that are expected to outperform the Magnificent 7.

AI Market Outlook for 2025

The AI market is expected to grow at a CAGR of 33.1% from 2023 to 2028, reaching a market size of $1,004.1 billion by 2028, according to a report by MarketsandMarkets. The increasing adoption of AI across various industries, coupled with advancements in AI hardware and software, is driving this growth. As AI becomes more integrated into businesses, the demand for AI stocks is likely to increase, presenting opportunities for investors.

AI Stocks to Watch in 2025

1. NVIDIA Corporation (NVDA)
NVIDIA is a leading provider of AI hardware, particularly graphics processing units (GPUs) that are crucial for AI training and inference. As AI technologies continue to evolve, NVIDIA's GPUs remain at the core of AI-driven applications. The demand for AI processing power is skyrocketing, positioning NVIDIA for strong growth in 2025 and beyond. NVDA has surged 182% year-to-date and 173% over the past year, reflecting the growing demand for AI hardware.

Truist Financial raised Nvidia's price target to $204 from $169 while maintaining a Buy rating, indicating strong potential for the stock in 2025. NVIDIA's investment in developing tools specifically designed for agentic AI development, including advanced simulation environments and neural network architectures, positions it to benefit substantially from the industry's growth.

1. ServiceNow (NOW)
ServiceNow represents an exciting opportunity in the enterprise software space as it incorporates agentic AI into its workflow automation platform. The company's AI Agents for IT, customer service, procurement, and HR demonstrate its commitment to deploying AI agents that work in partnership with people who supervise their work. ServiceNow's early success in implementing agentic AI solutions for IT service management and customer service automation suggests strong growth potential as these technologies mature.

The Zacks Consensus Estimate for the company’s 2024 earnings has remained steady at $13.87 per share over the past 30 days, indicating stable, long-term growth in the AI sector. ServiceNow's focus on practical, enterprise-ready solutions positions it well for significant market share growth in 2025.

1. International Business Machines (IBM)
IBM's enterprise-focused approach to agentic AI development positions it well in the market. The company's expertise in developing AI solutions for complex business processes and its strong presence in regulated industries give it a unique advantage. IBM's watsonx platform and its integration of agentic AI capabilities into its enterprise solutions demonstrate its commitment to advancing practical applications of this technology. The company's focus on responsible AI development and enterprise-grade solutions makes it an attractive option for institutional investors focused on stable, long-term growth in the AI sector.

The Zacks Consensus Estimate for IBM’s 2024 earnings has remained steady at $10.16 per share over the past 30 days, suggesting stable, long-term growth in the AI sector. IBM's strategic partnerships and AI integration into its cloud computing services, software, and products accentuate its role in the AI industry, positioning it for significant growth in 2025.

Conclusion

As the AI landscape evolves in 2025, investors should look beyond the Magnificent 7 to identify AI stocks with strong growth potential. NVIDIA, ServiceNow, and IBM are well-positioned to capitalize on the growing demand for AI technologies and outperform the Magnificent 7 in 2025. By investing in these AI stocks, investors can tap into the burgeoning AI market and benefit from its continued growth and transformation.