Two AI Stocks Set to Outperform Nvidia by Year-End 2025
Sunday, Jan 12, 2025 2:26 pm ET
4min read As the artificial intelligence (AI) revolution continues to reshape the tech landscape, investors are keeping a close eye on the stocks that stand to benefit the most from this transformative trend. While Nvidia (NVDA) has been a clear leader in the AI hardware space, two other stocks have emerged as strong contenders with the potential to outperform Nvidia by year-end 2025. These stocks are Palantir Technologies (PLTR) and Advanced Micro Devices (AMD).
Palantir Technologies (PLTR) has been making waves in the AI space with its proprietary platforms, Foundry and Apollo, which manage and deploy software. The company has seen significant growth in its government and private-sector contracts, with revenue and earnings consistently beating expectations. Palantir's recent partnership with Shield AI to develop scalable, AI-driven solutions for autonomous systems in challenging environments and its FedRAMP authorization for secure cloud services have further solidified its position in the AI market. With a 'wall of worry' surrounding the stock, investors may be hesitant to buy in, but this could amplify gains as sentiment shifts. Analysts like Dan Ives from Wedbush Securities have labeled PLTR the 'Messi of AI,' raising its price target from $57 to $75 with an 'Outperform' rating. As of December 6, PLTR was trading at a new all-time high of $76, up 6.2% on the day and 360% year-to-date, outperforming Nvidia's 195% gain over the same period.
Advanced Micro Devices (AMD) is another AI stock poised for significant growth in 2025. The company's new product lineup, including the MI300 series, targets data centers and AI-specific workloads, positioning it as a direct competitor to Nvidia's AI chips. AMD's strong financials, with revenue of $6.8 billion in the third quarter of 2024, an 18% year-over-year increase, and net income surging 158% year-over-year, indicate its potential in the AI space. The company's forecast for data center revenue to exceed $5 billion in 2024 further underscores its growth prospects. As of December 6, AMD was trading at $138, down nearly 2% over the past 24 hours but up less than 0.1% for the year.
While Nvidia has had a stellar year, both PLTR and AMD have strong fundamentals that could help them rally in 2025. PLTR's focus on software-driven AI solutions and AMD's emphasis on AI hardware innovation position them as complementary players in the AI ecosystem, challenging Nvidia from different angles. However, the sustainability of the AI boom will be crucial for these stocks to maintain their momentum.
In conclusion, investors looking for AI stocks with strong growth potential should consider Palantir Technologies (PLTR) and Advanced Micro Devices (AMD). Both stocks have demonstrated impressive fundamentals and are well-positioned to challenge Nvidia's dominance in the AI space. As the AI revolution continues to unfold, these stocks could be prime candidates for significant gains in 2025. However, it is essential for investors to conduct thorough research and consider their risk tolerance before making any investment decisions.
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