AI has been on everyone’s lips since OpenAI’s ChatGPT became widely popular. But it is not only individuals that are “obsessed” with AI. More than 40% of S&P 500 companies (a record number) mentioned AI in their first and second-quarter earnings calls for 2024, according to FactSet, a financial data company.
It is not surprising then that AI stocks continue to thrive.
What is perhaps surprising is that Nvidia, the poster child for the impact of the artificial intelligence revolution on the stock market, was not even the best performer in 2024. For example, its 179% return in 2024 was significantly lower than that of Palantir Technologies (355%) and AppLovin (751%).
What makes this outperformance interesting is that it shows that the AI revolution is not limited to AI development companies like Nvidia.
“Palantir’s outperformance signals the shift from AI development to application as companies like Palantir, IBM, Salesforce and others are now harnessing the power developed by Nvidia to generate profits for companies large and small,” said Chris Johnson, an equity and options analyst, writing for Money Morning, a market news and commentary firm.
In essence, even companies that are deploying artificial intelligence to offer products and services that will improve the operational performance of various businesses are benefiting massively.
Furthermore, the AI revolution is driving increased demand for data centers. Utility companies that supply electricity to them have also seen tremendous uptick in their stock prices.
In this article, we will identify the top 10 best stocks in AI, uncover the top reasons why investors showed interest in them, and then consider what the future holds for them (and why you should add them to your watchlist).
(Disclaimer: This list does not constitute a buy recommendation. Do your research before trading or investing in any of these stocks. For traders, we recommend reading “Stock Picking Made Simple”. For investors, we recommend reading “Key Lessons From Warren Buffett’s Top 10 Stock Holdings.”)
If you are interested in investing in artificial intelligence, this is the place to start.
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1. SoundHound AI Inc. (SOUN)
The first of our best stocks in AI is SoundHound AI Inc.
SoundHound uses voice recognition and conversational AI technology to enable interactions between humans and various devices and systems.
Some of their solutions include custom voice assistants for companies, integration of conversational voice assistants into companies’ products, voice solutions for cars, and a music recognition service for individuals.
Keyvan Mohajer, CEO of SoundHound
Source: Business Insider
Overview of 2024 performance
SOUN opened the year on January 2, 2024 at $2.13 per share and closed it on December 30 at $22.68 per share, a 965% rally.
Fundamentals behind the performance
SOUN’s growth has been driven by rising revenue as its voice AI products expand into many industries, including automotive, restaurants, financial services, healthcare, and insurance, according to Dan Ives, a stock analyst at Wedbush Securities, quoted by Market Watch, an investment research firm.
In Q3, 2024, it recorded $25.1 million in revenue, an 89% increase year-over-year (YoY).
Having Nvidia as a partner and investor is another contributing factor, according to The Motley Fool, a personal finance education website. It was when Nvidia announced its investment in the company that the stock quadrupled in price, the beginning of its meteoric rise.
Another contributor is its acquisition of Amelia, an enterprise AI software company. This has helped to expand its total addressable market (TAM) and diversify its business, according to analysts at D.A Davidson, an investment firm, quoted by Market Watch.
For example, while 90% of its revenue came from the automotive industry in Q3, 2023, five industries represented between 5% and 25% of total revenue in Q3, 2024, noted The Motley Fool.
Why watch this stock?
Revenue is expected to continue its upward trajectory. The company forecasts revenue between $155 million to $175 million in 2025, according to The Motley Fool. This is supported by an order backlog that exceeds $1 billion.
Ives also expects its partnership with Nvidia on voice-generative AI to improve its tech stack and launch the third pillar of the company’s growth strategy in 2025. Similarly, its Polaris large language model will further improve its speech recognition technology and expand its reach.
However, there are certain issues with SOUN you should be aware of, according to The Motley Fool.
First, the company is burning money at an unsustainable rate (over $92 million in the first three quarters of 2024). Second, the company is pursuing a new equity facility (to raise $120 million) that will dilute existing shareholders. Third, the stock is expensive, with its P/S (price-to-sales) ratio of 109 (as of December 31, 2024) exceeding that of Nvidia (30).
So, while you may want to bank on its positive revenue and growth trajectory, you need to introduce these three factors into your evaluation of this stock.
2. AppLovin (APP)
AppLovin is a technology company that helps mobile app developers publish, market, and monetize their apps. It connects them to advertisers and helps them generate revenue by displaying advertisements on their apps.
The company uses artificial intelligence to optimize marketing and advertising as it ensures that the right ads are delivered to the right people. It does this through AI algorithms that analyze big data and also predict user behavior.
AppLovin’s Products
Source: The Strategy Story
Overview of 2024 performance
APP opened at $39.41 per share on January 2, 2024 and closed at $335.38 per share on December 31, 2024, producing a 751% return for the year.
Fundamentals behind the performance
In Q3, 2024, AppLovin’s advertising revenue increased by 66%, its total revenue grew by 39% YoY, and its profit tripled YoY. The company attributed the growth in its advertising revenue to improvements to its AI model.
Strategic expansion is another contributing factor. “The company has achieved remarkable revenue growth by leveraging its AXON 2.0 technology and strategic expansion in gaming studios,” according to Nasdaq. They also mentioned its expansion into e-commerce as a contributor to revenue growth.
Why watch this stock?
“AppLovin’s strategic focus on innovative technology and expansion within the gaming industry positions it well for sustained growth,” according to Nasdaq. “With AXON 2.0 driving operational efficiencies and a diversified approach to revenue generation, AppLovin is poised to maintain its growth momentum, making it an attractive option for long-term investors.”
The company’s strong financial health is another positive indicator noted by Nasdaq. Its current ratio of 2.41 at the end of Q3 2024 was higher than the industry average (2.16).
They also noted that analysts expect earnings to increase by 45.3% and sales to increase by 21.8% in 2025.
Nasdaq raised just two concerns: the sustainability of its in-game advertising revenue and possible volatility resulting from its expansion into other ventures. Nevertheless, they remain confident in AppLovin’s ability to drive sustainable growth.
This is not surprising since the stock seems to be a darling of Wall Street. “Jefferies (an investment bank) analysts led by James Heaney named AppLovin a top pick for 2025 in a note on Tuesday (January 7, 2025), while 21 of 27 analysts tracked by Bloomberg have a buy or equivalent rating,” according to BNN Bloomberg, a Canadian financial news website. “No firms recommend selling the shares.”
3. Palantir Technologies (PLTR)
Palantir Technologies is a software company that provides tools for organizations to analyze and visualize their large datasets so they can extract business insights from them. They have a product for businesses and another one for government and intelligence agencies.
The company uses AI and machine learning to provide advanced data processing, predictive analytics, decision augmentation, and natural language processing (NLP) for its users. It also has a generative AI tool that helps them interact more intuitively with their data.
Alex Karp, CEO of Palantir Technologies
Source: Palantir Technologies
Overview of 2024 performance
PLTR opened at $16.95 per share on January 2, 2024 and closed the year on December 30 at $77.18 per share, a 355% growth rate.
Fundamentals behind the performance
Palantir Technologies experienced a 30% YoY growth in revenue in Q3, 2024, and recorded a net income of $144 million (and a 20% net income margin). It also beat its earnings per share (EPS) estimates for the quarter.
The company secured major deals with the US Department of Defense in 2024. It also experienced a significant rally after Trump won the 2024 US election, as noted by Investor’s Business Daily, a financial news platform.
IBD believes this could be the result of expectations that AI will play a bigger role in defense spending and/or the connection of some of Trump’s allies (Peter Thiel, David Sacks, and Elon Musk) with Palantir Technologies.
However, while government contracts have played a role, US commercial revenue experienced more growth (54% YoY) than US government revenue (40% YoY) in PLTR’s Q3, 2024 results.
Why watch this stock?
Palantir Technologies seems well-positioned to get more government contracts in the following years, according to IBD.
Furthermore, the company is securing partnerships with firms like L3Harris ( a defense firm), Amazon, Oracle, and Booz Allen Hamilton (a competitor in government and defense services) that could help accelerate its expansion plans.
The only concern some analysts have raised is its expensive valuation.
“While we do believe the company has an AI technology advantage in the long-term, we are concerned that the stock has rallied to unsustainable valuation levels primarily on the back of AI euphoria and retail trading momentum,” according to Brent Thill, a stock analyst at Jefferies, an investment bank, quoted by IBD.
“We believe fundamentals are alive and the company has potential to gain share in an underpenetrated and large TAM should the recent AI momentum continue. However, PLTR stands alone as the most expensive publicly traded software company and history tells us that these multiples are unsustainable.”
4. Vistra Corporation (VST)
Vistra Corp. is an electricity and power generation company. In addition to optimizing its operations with AI, it has been a key supplier of energy to data centers in the US. For example, Vistra Corp. is a key supplier of power for Amazon (AMZN) and Microsoft (MSFT), two cloud computing powerhouses.
Overview of 2024 performance
VST went from $38.29 per share on January 2, 2024 to $140.09 per share on December 30, a 266% growth rate.
Jim Burke, CEO of Vistra Corporation
Source: Vistra Corp.
Fundamentals behind the performance
Vistra stock rallied due to rising electricity demand to meet the needs of data centers. As noted above, it secured strategic partnerships with Amazon and Microsoft for its solar facilities.
Its revenue in Q3, 2024 grew by 54% YoY.
Why watch this stock?
The board authorized an additional $1 billion for share repurchases and its chief strategy officer noted in Q3 earnings call that they are in discussions about building new gas plants for a data center project, according to IBD.
Utilities companies like Vistra are expected to keep riding the wave of increased energy demand by data centers.
By 2030, data centers will be responsible for 11-12% of total energy demand in the US, up from around 4% in 2024, according to McKinsey and Co., a global consulting firm.
5. Credo Technology (CRDO)
The fifth of the best stocks in AI is Credo Technology.
They provide high-speed connectivity solutions (including semiconductor chips, optical modules, and active electrical cables) for data centers, enterprise networks, and cloud computing. These solutions help to improve the speed and efficiency of data transmission.
Bill Brennan, CEO of Credo Technology
Source: The Business Journals
Overview of 2024 performance
CRDO opened on January 2 at $19.03 per share and closed on December 30 at $69.60 per share, a 266% rally.
Fundamentals behind the performance
Credo’s last quarterly results (Q2,2025) showed that the company is doing something right. Its revenue of $72 million was a 64% YoY growth and it exceeded earnings per share (EPS) estimates by a 34.6% margin, according to Bar Chart, a provider of financial markets data.
AI was a significant driver of these incredible results. “For the past few quarters, we have anticipated an inflection point in our revenues during the second half of fiscal 2025,” according to Bill Brennan, the CEO, quoted by Bar Chart. “I am pleased to share that this turning point has arrived, and we are experiencing even greater demand than initially projected, driven by AI deployments and deepening customer relationships.”
Their strong clientele is another factor driving growth. “Its solutions are used by all the major hyperscalers, and includes more than 20 blue chip clients, including over 10 original equipment manufacturers and original design manufacturers, over 10 optical module manufacturers and other leading enterprises,” according to Nasdaq.
Why watch this stock?
Credo’s huge cash and short-term investment balance of $383 million also shows that the company is stable and has the capacity for more growth.
The company projects a 67% jump in revenue by the end of next quarter and they expect this to be driven by increasing AI adoption. They also expect operation expenses to grow at less than half the rate of revenues, leading to higher margins, according to Nasdaq.
Credo is currently trading at a premium – its P/S ratio of 23.24X is higher than the sector’s 6.98X. Though this may be a concern for some investors, Nasdaq believes that its premium valuation is justified.
6. Nvidia Corporation (NVDA)
Here comes the poster child for AI stocks.
Nvidia specializes in graphics processing units (GPUs), AI hardware, and AI software. It designs specialized GPUs that can handle AI workloads and also provides hardware and software for data centers.
Nvidia has also expanded into AI-driven autonomous vehicles and healthcare applications while also exploring the technology in its gaming and robotics platforms.
Source: B2Broker
Overview of 2024 performance
NVDA opened at $49.24 per share on January 2, 2024 and closed for the year at $137.49 per share, a 179% growth rate.
Fundamentals behind the performance
Nvidia’s latest quarterly results (Q3, 2025) exceeded expectations, a feat that has now become the norm for the chip maker.
Revenue nearly doubled YoY while net income more than doubled YoY.
The company’s data center revenue hit a record high of $30.8 billion, a 112% increase YoY, as many of the Magnificient 7 companies (Amazon, Microsoft, Alphabet, Apple, Nvidia, Tesla, and Meta ) spent more on AI infrastructure. “The age of AI is in full steam, propelling a global shift to Nvidia computing,” said Jensen Huang, the CEO.
Nvidia would end up becoming just the third company with a market cap exceeding $3 trillion (after Apple and Microsoft).
Why watch this stock?
Nvidia’s market share in the supply of GPUs does not seem to be under any imminent threat. Therefore, as the demand for AI technology continues to increase, the company should keep beating revenue and profit estimates.
“For Q4 FY2025, Nvidia expects revenue to hit $37.5 billion (±2%), with strong gross margins of about 73%, signaling continued demand for its AI solutions,” according to Bar Chart.
7. Astera Labs (ALAB)
Astera Labs is a semiconductor company that provides connectivity solutions for AI and cloud computing infrastructure. Their products help to improve signal integrity and reach, expand memory capacity, and optimize data transfer in data centers.
Companies like Nvidia use these products to support the workloads needed for AI and cloud computing.
Astera Labs’ Products
Source: Astera Labs
Overview of 2024 performance
ALAB went from a share price of $52.56 on January 2, 2024 to a share price of $141.53 on December 30, a 169% rally.
Fundamentals behind the performance
Many of the top AI companies delivered incredible revenue growth in their latest quarterly results but Astera Labs seem to top them all. Its revenue increased by 206% YoY in Q3, 2024. More importantly, this was the fourth consecutive quarter of three-digit revenue growth, according to IBD.
Many of its investors also expect that it will produce its first annual profit when the 2024 financial year results come out.
Why watch this stock?
Revenue seems poised to keep up its upward trajectory. However, there are concerns about whether the company will finally turn profitable when its annual reports come out. If the results disappoint investors, the stock may experience a short dumping (or it may not).
2025 is likely going to be the year when investors will start demanding that AI companies provide proof of returns, according to David Dietze, an analyst at Peapack Private Wealth Management, quoted by Yahoo Finance.
“Wall Street’s the type of place where it’s like, ‘Show me the money, like, yesterday’…These investments and capital expenditures are great, but when does the cash flow start coming in? And right now many AI companies have gotten a pass on that, but I think increasingly Wall Street’s going to say, ‘No, we’ve seen the capital expenditures, you’ve got the AI label, but now we want to see the cash flows coming in from that.’ And that’s what we’re gonna be watching so carefully next year”.
8. GE Vernova (GEV)
GE Vernova is a spin-off from General Electric (GE). The company aims to electrify as well as decarbonize the world through its energy solutions. It has also served the energy needs of data centers, especially through its gas turbine-driven energy solution.
Scott Strazik, CEO of GE Vernova
Source: Infosys
Overview of 2024 performance
GEV went from $141.01 per share on January 2, 2024 to $330.26 on December 30, a 134% growth.
Fundamentals behind the performance
GEV raised its long-term (2028) sales outlook (from $43 billion to $45 billion) in December on the back of rising demand for gas turbines and electrical grid equipment used to power AI data centers.
The company’s strong balance sheet (low debt levels and high cash and cash equivalents levels) is another factor in its favor. It shows that the company is stable and has the financial strength to grow and expand.
Why watch this stock?
Rising revenue and a strong financial position should continue to work in favor of the company. Similarly, it should continue to benefit from the electrification and decarbonization of the global economy.
However, some analysts raise certain concerns, according to Morning Star, an investment research company.
First, it has an inconsistent track record on margins and profitability. Second, the market for gas turbines could face challenges from long-term decarbonization targets. Third, its onshore wind business is focused on the US market, and changes to tax policy can significantly affect the company.
9. Broadcom (AVGO)
Broadcom Inc. develops chips used by data centers, enterprise networks, and broadband systems. They also provide infrastructure software for IT operations, automation, and cybersecurity.
Broadcom’s Products
Source: Easyfun Electronics
Overview of 2024 performance
AVGO opened at $109.21 per share on January 2 and ended the year at $235.58, a 116% rally.
Fundamentals behind the performance
Broadcom became the 9th US company to exceed a $1 trillion market capitalization in December 2024. Its strong performance has been driven by rising revenue and earnings that have exceeded expectations.
Its latest quarterly results (Q4, 2024) showed that revenue grew by 51% YoY and earnings increased by 23% YoY, according to Investopedia. Similarly, Broadcom’s annual revenue from AI tripled to $12.2 billion.
Why watch this stock?
“Looking ahead, Broadcom expects Q1 FY25 revenue of about $14.6 billion (+22% YoY), signaling continued strong growth,” noted Bar Chart.
Analysts are positive about the company’s ability to keep benefiting from the AI revolution.
The main concern, noted by Zacks Research, an investment research company, is that the stock could be overvalued and thus not so appropriate for value investors. Its P/E ratio (price-to-earnings ratio) of 36, P/S ratio of 20.78, and P/B (price-to-book) ratio of 15.84 all exceed the industry average (27.81, 4.93, and 2,93, respectively).
10. Constellation Energy Group (CEG)
The last in our list of the best stocks in AI is Constellation Energy Group.
Like Vistra and GE Vernova, Constellation Energy Group is an energy supplier that powers data centers.
Joe Dominguez, CEO of Constellation Energy Group
Source: Barron’s
Overview of 2024 performance
CEG went from $116.40 per share on January 2, 2024 to $226.32 per share on December 30, at a 94% growth rate.
Fundamentals behind the performance
The company’s net income per share increased by 29% YoY in Q3, 2024.
In the same quarter, the company partnered with Microsoft to restart work on a nuclear plant that will provide the electricity needed to power its data centers.
Why watch this stock?
As we have seen, there is a global demand for electrification and decarbonization that favors companies like Constellation Energy.
Furthermore, the company’s partnership with Microsoft shows that it is well-equipped to benefit from the rising demand for data centers.
How to buy AI stocks in the UAE
It is worth reiterating that this list does not constitute a buy recommendation. Instead, it aims to show you where you can start your analysis if trading or investing in artificial intelligence stocks is part of your strategy for 2025.
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Takeaways
- AI stocks performed incredibly well in 2024, with many of them exceeding the S&P 500 index in multiples.
- The outstanding performance was not limited to AI development companies like Nvidia that are spearheading advances in AI technology. AI application stocks like AppLovin and Palantir Technologies also soared.
- Interestingly, the best AI stocks also include the stocks of utility companies powering data centers (a necessary infrastructure for the AI revolution).
- The 10 best stocks in AI have strong financial performance behind them, which shows that their performance is not due solely to growth potential or investors’ excitement about anything in the AI market.