The adoption of artificial intelligence (AI) continues to grow at a rapid rate in 2025. Leading companies across semiconductors, cloud services, and software are seeing surging demand. Investors that stick with quality companies with strong fundamentals and a history of delivering returns to shareholders will do well over the long term. Here are two top stocks to consider adding to your portfolio right now.
Image source: Getty Images.
1. ServiceNow
ServiceNow (NOW 0.87%) is playing a pivotal role in helping companies transform their operations for AI. Its cloud-based platform offers powerful tools that can automate and streamline workflows.
ServiceNow generates recurring revenue from subscriptions, which means lower business risk compared to companies that have to sell more products every year to generate growth. Over the last 10 years, revenue grew at a compound annual growth rate of 32%, with free cash flow growing at 44%. This fueled a 1,100% cumulative return in the share price. Its recent quarterly revenue growth rate suggest there is still massive market potential for its platform.
In the first quarter, subscription revenue grew 19% year over year to $3 billion, or an increase of 20% excluding currency changes. Importantly, remaining performance obligations grew 25% over the year-ago quarter to $22 billion, indicating excellent long-term growth prospects.
ServiceNow is integrating AI across its platform, improving efficiency and productivity, which companies are desperately seeking to stay competitive. The company is moving beyond its historical focus on information technology solutions to expand into supply chain and customer relationship management offerings.
These additional services are making the platform more robust to attract larger enterprises, and it's paying off. ServiceNow now has more than 500 customers with an annual contract value of $5 million or more.
Management believes the opportunity for the company is accelerating. It sees a clear path to reach annual revenue of $30 billion. That represents significant growth over the company's trailing-12-month revenue of $11.5 billion.
ServiceNow's history of growth, subscription-based business model, and momentum from AI integration make it a quality growth stock to hold for the long term.
Image source: Getty Images.
2. Microsoft
Another stock to invest in AI without taking a lot of risk is the long-reigning software king, Microsoft (MSFT 1.88%). Microsoft's transformation over the last decade into a cloud-first company has significantly strengthened its competitive moat and positioned it well for the AI era.
Microsoft's revenue from cloud services, including its Azure enterprise service, exceeded $42 billion last quarter, representing a year-over-year increase of 22% (adjusted for currency changes). It is benefiting from AI integration across software offerings, from its Copilot personnel assistant on Windows to robust services in Azure that help companies build their own AI applications.
Azure is gaining share in the $348 billion cloud computing market, based on Synergy Research's estimate, with revenue growing 33% year over year last quarter. This reflects strong momentum and its continued buildout of data centers worldwide to meet cloud demand.
Companies are rapidly adopting Microsoft's Azure AI Foundry service, which allows them to build, deploy, and manage AI applications. It is also seeing strong demand for the Microsoft Fabric data analytics service, with paid customers up 80% year over year last quarter, indicating a big opportunity for Microsoft.
Microsoft said its commercial remaining performance obligations (RPOs) increased 34% year over year to $315 billion, with 40% expected to be realized in the next 12 months. Moreover, RPO beyond the next year grew 47%, suggesting a long runway of growth.
Microsoft is a highly profitable business generating $69 billion in free cash flow on $270 billion of trailing-12-month revenue. It's a financially strong business with 98% of its revenue coming from recurring, long-term revenue agreements through subscriptions and multiyear contracts.This makes Microsoft one of the best stocks to invest in AI.
