After a recent pullback in the AI stock market, some investors are questioning the state of the economy. However, there are still AI stocks that show promising growth potential. Here are three stocks that are expected to move higher in 2025.
1. Palantir: Despite its share price reaching multiyear highs and concerns about valuation, Palantir’s Artificial Intelligence Platform (AIP) has delivered impressive productivity gains to organizations, generating increased interest. A partnership with Microsoft, which allows Palantir to leverage Azure OpenAI Service, further enhances its growth prospects. Palantir’s second-quarter revenue in 2024 reached $678 million, a 27% increase, and the company reported its seventh consecutive profitable quarter. With accelerating growth, Palantir is poised to thrive regardless of the economy.
2. Qualcomm: As a semiconductor stock, Qualcomm has faced declining sales due to the completion of the 5G upgrade cycle. However, the company’s Snapdragon 8 Gen 3 chip, which brings AI capabilities to smartphones, could initiate the next upgrade cycle, encouraging users to replace their devices. Qualcomm has also expanded into other product lines, supporting the Internet of Things, automotive applications, and PCs. In the fiscal third quarter of 2024, the company experienced an 11% yearly revenue increase to $9.4 billion, along with an 18% rise in net income. With a relatively low P/E ratio of 21, Qualcomm’s stock may not remain undervalued for long if the AI upgrade cycle for smartphones materializes.
3. Super Micro Computer: Known for manufacturing servers and IT hardware, Super Micro Computer gained significant traction with the growth of the cloud. Its partnership with Nvidia, incorporating AI chips into its servers, led to a surge in demand. Despite a recent retracement of approximately 55%, the stock has experienced substantial growth, up over 3,000% in the last five years. In the fourth quarter of fiscal 2024, Supermicro’s revenue reached $5.3 billion, a yearly gain of 142%. Although a fast-rising cost of revenue impacted the bottom line, net income still grew by 82% over the past year. With a P/E ratio of 28, Supermicro’s valuation appears cheap, indicating potential for a rebound.