Investors piled into artificial intelligence (AI) stocks last year on optimism that this hot technology would transform every industry -- and this powered gains in the three major benchmarks. The S&P 500, the Nasdaq, and the Dow Jones Industrial Average advanced in the double digits, led by companies developing and using AI. The idea is creators of AI tools and services will benefit as they sell them to others, and users of AI will benefit as the technology makes them more efficient and leads them to great discoveries.
The good news for investors who got in on this story early and investors who now are looking to buy AI stocks is that growth is far from over. Analysts forecast today's $200 billion market will reach more than $1 trillion by the end of the decade -- so there is a lot for AI companies and their investors to gain in the coming years.
And the even better news is this: To potentially score a big AI win, you don't have to research and buy shares of several players. One company in particular is perfectly positioned to dominate the field now and over the long term, and this could translate into fantastic stock performance. So, if I could only buy one stock to bet on the AI boom in 2025, it would be this one.
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The search for an AI winner
You may have the feeling that, after the performance of AI stocks last year, you now should search far and wide for a player that hasn't yet taken off. But that isn't necessary. One of last year's AI winners might have just been getting started as plenty of catalysts ahead could drive further gains this year and beyond. This means it's not too late to invest in this top stock, and you could reap the rewards in both the near term and the long term.
The stock I would buy to bet on the AI boom this year and over the long term is Nvidia (NVDA 1.56%). And here's why. My first point is Nvidia already has established itself as the provider of the highest-performance AI chips, or graphics processing units (GPUs). These are the basic elements needed for crucial AI tasks like the training and inferencing of models.
Nvidia has benefited from the initial wave of AI growth as data centers built out their infrastructure and companies developing AI platforms sought out the company's GPUs. This helped Nvidia to report quarter after quarter of double- or triple-digit revenue growth in recent years -- and gross margin of greater than 70% shows the company is highly profitable on sales.
NASDAQ: NVDA
Key Data Points
A commitment to innovation
Of course, Nvidia faces competition in the chip market, but the company's commitment to innovation -- promising annual updates to its chips -- should make it very difficult for rivals to jump ahead.
Right now, Nvidia is launching its new Blackwell architecture, a customizable platform with various chips and networking options, and expects several billion dollars in revenue right out of the gate. UBS forecasts Blackwell revenue of $9 billion by early next year, up from an earlier forecast of $5 billion, according to Guru Focus. And Nvidia's Rubin AI architecture could be following close behind, with reports of a launch later this year.
Revenue growth from Blackwell and news on Rubin could serve as catalysts for stock performance in the months to come. Meanwhile, Nvidia's moves over the past few years to develop an entire portfolio of AI products and services also may offer some catalysts. Thanks to this, and particularly the company's offering of software, Nvidia is helping customers apply AI to their businesses through tools such as AI agents.
The next wave of AI growth
And this could represent the next wave of AI growth, a wave that could supercharge Nvidia's revenue. The company already has launched blueprints to help customers create AI agents tailored to their needs, and Nvidia partners also have created agents that integrate with Nvidia Enterprise software.
The AI agent market, at a compound annual growth rate of 44%, is expected to reach $47 billion by 2030, according to Markets and Markets research. This creates a whole new growth opportunity for Nvidia.
Finally, it's important to remember that Nvidia, because of its creation of AI platforms specifically for industries such as automobiles or healthcare, may win as these sectors increase their use of AI.
The idea is Nvidia has set itself up to gain from every stage of AI development known to us so far, making investment in this top player the best way to bet on the AI boom this year and over time.
