The second year of Wall Street’s bull market rally has come to a close, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite indices recording significant gains. While there were numerous catalysts driving stock valuations higher in 2024, artificial intelligence (AI) played a pivotal role in shaping the market landscape.
As we look ahead to 2025, it’s essential to identify the AI-driven stocks that will continue to lead the charge and those that may be due for a correction. In this article, we’ll examine two unstoppable AI stocks to buy hand over fist in 2025 and one to avoid at all costs.
Two Unstoppable Artificial Intelligence (AI) Stocks to Buy Hand Over Fist in 2025
Alphabet Inc. (GOOGL)
Alphabet is a leader in the development of AI technology, with its Google subsidiary driving innovation in areas such as machine learning, natural language processing, and computer vision. The company’s investments in AI have paid off significantly, with Google Cloud Platform becoming a major player in the cloud computing market.
- Pristine Balance Sheet: Alphabet boasts an impressive balance sheet, with over $33 billion in net cash, providing ample opportunity for stock repurchases and investments in higher growth initiatives.
- AI-Driven Growth: Alphabet’s AI-powered services are driving growth across various segments, including Google Cloud Platform, Google Ads, and YouTube.
- Forward P/E of 9: The company’s forward price-to-earnings (P/E) ratio stands at an attractive 9, making it an attractive buy for long-term investors.
Alibaba Group Holding Limited (BABA)
Alibaba is a dominant player in the Chinese e-commerce market, with its Taobao and Tmall marketplaces accounting for over half of China’s online retail sales. The company has made significant investments in AI research and development, leveraging this technology to enhance customer experiences and drive operational efficiency.
- Pristine Balance Sheet: Alibaba boasts an impressive balance sheet, with over $33 billion in net cash, providing ample opportunity for stock repurchases and investments in higher growth initiatives.
- AI-Driven Growth: Alibaba’s AI-powered services are driving growth across various segments, including e-commerce, digital payments, and cloud computing.
- Forward P/E of 9: The company’s forward P/E ratio stands at an attractive 9, making it an attractive buy for long-term investors.
One Artificial Intelligence Stock to Avoid in 2025: Palantir Technologies Inc. (PLTR)
Palantir is a data-mining specialist that has seen its stock price skyrocket by over 1,000% in the past two years. While the company’s services are indeed unique and difficult to replicate at scale, its valuation may be unsustainable.
- Overvalued: Palantir’s forward price-to-sales (P/S) ratio stands at an alarming 68, significantly higher than the historical average for market-leading businesses.
- Decelerating Sales Growth: The company’s sales growth has been decelerating in recent years, raising concerns about its long-term sustainability.
- Limited Long-Term Growth Ceiling: Palantir’s Gotham platform may have a limited long-term growth ceiling due to its reliance on government contracts, which are subject to fluctuations in government spending.
In conclusion, while AI-driven stocks continue to dominate the market landscape, not all companies in this space will perform equally well. By identifying the strengths and weaknesses of each stock, investors can make informed decisions about which AI stocks to buy hand over fist in 2025 and which to avoid at all costs.
Double Down on These Incredible Companies
Don’t miss your chance to invest in these high-growth companies before it’s too late. Our expert team of analysts has identified three incredible companies that are poised for significant growth. See the latest "Double Down" stock recommendations and take advantage of this rare opportunity.
About The Motley Fool
The Motley Fool is a financial services company dedicated to providing unbiased, data-driven research and analysis to help investors make informed decisions. Our team of expert analysts is committed to delivering high-quality content that educates and informs investors about the stock market.
Disclosures
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sean Williamson has positions in Alphabet. The Motley Fool recommends Alibaba Group, Alphabet, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
The second year of Wall Street’s bull market rally has come to a close, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite indices recording significant gains. While there were numerous catalysts driving stock valuations higher in 2024, artificial intelligence (AI) played a pivotal role in shaping the market landscape.
As we look ahead to 2025, it’s essential to identify the AI-driven stocks that will continue to lead the charge and those that may be due for a correction. In this article, we’ll examine two unstoppable AI stocks to buy hand over fist in 2025 and one to avoid at all costs.
Two Unstoppable Artificial Intelligence (AI) Stocks to Buy Hand Over Fist in 2025
Alphabet Inc. (GOOGL)
Alphabet is a leader in the development of AI technology, with its Google subsidiary driving innovation in areas such as machine learning, natural language processing, and computer vision. The company’s investments in AI have paid off significantly, with Google Cloud Platform becoming a major player in the cloud computing market.
- Pristine Balance Sheet: Alphabet boasts an impressive balance sheet, with over $33 billion in net cash, providing ample opportunity for stock repurchases and investments in higher growth initiatives.
- AI-Driven Growth: Alphabet’s AI-powered services are driving growth across various segments, including Google Cloud Platform, Google Ads, and YouTube.
- Forward P/E of 9: The company’s forward price-to-earnings (P/E) ratio stands at an attractive 9, making it an attractive buy for long-term investors.
Alibaba Group Holding Limited (BABA)
Alibaba is a dominant player in the Chinese e-commerce market, with its Taobao and Tmall marketplaces accounting for over half of China’s online retail sales. The company has made significant investments in AI research and development, leveraging this technology to enhance customer experiences and drive operational efficiency.
- Pristine Balance Sheet: Alibaba boasts an impressive balance sheet, with over $33 billion in net cash, providing ample opportunity for stock repurchases and investments in higher growth initiatives.
- AI-Driven Growth: Alibaba’s AI-powered services are driving growth across various segments, including e-commerce, digital payments, and cloud computing.
- Forward P/E of 9: The company’s forward P/E ratio stands at an attractive 9, making it an attractive buy for long-term investors.
One Artificial Intelligence Stock to Avoid in 2025: Palantir Technologies Inc. (PLTR)
Palantir is a data-mining specialist that has seen its stock price skyrocket by over 1,000% in the past two years. While the company’s services are indeed unique and difficult to replicate at scale, its valuation may be unsustainable.
- Overvalued: Palantir’s forward price-to-sales (P/S) ratio stands at an alarming 68, significantly higher than the historical average for market-leading businesses.
- Decelerating Sales Growth: The company’s sales growth has been decelerating in recent years, raising concerns about its long-term sustainability.
- Limited Long-Term Growth Ceiling: Palantir’s Gotham platform may have a limited long-term growth ceiling due to its reliance on government contracts, which are subject to fluctuations in government spending.
In conclusion, while AI-driven stocks continue to dominate the market landscape, not all companies in this space will perform equally well. By identifying the strengths and weaknesses of each stock, investors can make informed decisions about which AI stocks to buy hand over fist in 2025 and which to avoid at all costs.
Double Down on These Incredible Companies
Don’t miss your chance to invest in these high-growth companies before it’s too late. Our expert team of analysts has identified three incredible companies that are poised for significant growth. See the latest "Double Down" stock recommendations and take advantage of this rare opportunity.
About The Motley Fool
The Motley Fool is a financial services company dedicated to providing unbiased, data-driven research and analysis to help investors make informed decisions. Our team of expert analysts is committed to delivering high-quality content that educates and informs investors about the stock market.
Disclosures
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sean Williamson has positions in Alphabet. The Motley Fool recommends Alibaba Group, Alphabet, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
