Prediction: 2 Artificial Intelligence (AI) Stocks That Will Be Worth ...
Key Points
Nvidia has been the big artificial intelligence (AI) winner so far, but these two companies might have better long-term prospects.
Few companies have benefited from the rise of generative artificial intelligence (AI) as much as Nvidia (NVDA). The chipmaker saw its stock price increase nearly eightfold from the launch of OpenAI's ChatGPT on Nov. 30, 2022, through the end of 2024. It's briefly spent time as the most valuable company in the world, and its current market cap sits around $2.9 trillion, as of this writing.
Nvidia: The AI Powerhouse
Nvidia's strong financial results look poised to continue in 2025 as big tech plans to spend tens of billions of dollars on AI data centers outfitted with its GPUs. Tech companies have remained committed to their spending plans, even after DeepSeek's open-source R1 model showed the cost-saving potential of software innovations over adding more advanced hardware. Still, there's now more apparent long-term vulnerability to Nvidia's cash cow than many investors saw previously.
Meta Platforms: The Social Media AI Giant
Meta Platforms (META) is one of Nvidia's biggest customers. The company behind social media platforms Facebook, Instagram, and WhatsApp has committed to between $60 billion and $65 billion in capital expenditures in 2025, including plans to build a massive data center in Louisiana.
There's good reason for Meta's continued investment in AI. It stands to benefit massively from the innovations of the last two years. It's already seen significant improvements to its recommendation algorithm for content across Facebook and Instagram by scaling it to a more general model based on principles it learned developing large language models.
Meta could be a $3 trillion stock within three years by maintaining a P/E ratio in the mid-20s while growing earnings at a rate in the high teens. If Nvidia stock stagnates in that period as big tech looks to make AI profitable, it could overtake the chip giant's market value.
Amazon: The E-commerce and Cloud Computing Front-runner
Amazon (AMZN) has seen its profitability explode over the last two years. Free cash flow went from negative $19.7 billion for the 12 months ending in September 2022 to $47.7 billion for the most recent 12-month period. And that growth looks poised to continue over the next few years.
The biggest driving force behind Amazon's recent success is its cloud computing business, Amazon Web Services, or AWS. Amazon operates the largest public cloud platform, and it's building tools to help developers build on top of the leading-edge foundation models for generative AI.
Amazon stock currently trades for about 59 times trailing free cash flow, slightly above its historical average around 50. That suggests investors are pricing in faster growth in free cash flow going forward. As that free cash flow growth comes to fruition over the next few years, Amazon should see its share price climb higher, even if that multiple comes down. That could easily result in a $3 trillion valuation for the stock in the next couple of years, eventually overtaking Nvidia.
