Two AI Stocks Worth Buying Now

For investors seeking promising artificial intelligence (AI) stocks, it's essential to focus on companies that Wall Street may be overlooking at this moment. Certain technology leaders, both in hardware and software, are seeing increased demand for their products and services, yet their stock prices do not reflect this growth potential. As these companies continue to expand, their stock values are likely to follow suit.

This article presents two AI stocks that could yield significant returns for investors in the upcoming years.

1. Advanced Micro Devices

As of now, Advanced Micro Devices (AMD) has experienced an 8% decline in its stock price following the release of its fourth-quarter earnings report. AMD is a leading manufacturer of graphics processing units (GPUs) essential for AI training, and it is successfully capturing more market share, especially against Intel, in the consumer category. Both sectors are poised for strong growth in 2025, making AMD's recent price drop an appealing opportunity for investors.

AMD reported robust performance in 2024, finishing the year with a 24% increase in revenue and a 42% rise in adjusted earnings year over year for Q4. However, some analysts seemed to expect more precise guidance on future revenue from AMD's data center GPUs in 2025.

Concerns have surfaced regarding the growth of capital expenditures related to AI infrastructure. A Chinese company, DeepSeek, has claimed to create a cutting-edge AI model at a significantly lower cost than prominent models available from OpenAI and others, raising anxiety about decreased investment in data center AI. Last year, AMD generated $5 billion in revenue from this segment, constituting 19% of its total sales.

Despite these worries, they seem to be exaggerated. The financial commitment needed to develop advanced language models, like DeepSeek R1 or OpenAI’s ChatGPT, vastly differs from what is required to create AI systems that support enterprise requirements. For instance, Meta Platforms, which utilizes AMD's Instinct MI300X GPU for its Grand Teton AI platform, plans to invest between $60 billion to $65 billion this year, with a considerable portion directed toward generative AI and other business priorities. AMD anticipates another impressive growth year in its data center business after reporting a remarkable 94% increase in this segment's revenue throughout 2023.

Moreover, AMD revealed a year-over-year revenue surge of 58% from its client segment in Q4, highlighting ongoing sales of its Ryzen PC processors. The company seems well-positioned for continued success in the PC market, particularly since Dell introduced a comprehensive lineup of commercial PCs powered by Ryzen for the first time.

Investors can purchase AMD shares at an attractive forward price-to-earnings (P/E) ratio of 23, given its current trading price of $112 per share. This valuation appears to be a bargain for a leading semiconductor company.

2. C3.ai

For those interested in AI investments, it’s beneficial to consider companies involved in both hardware and software. Among the top AI software stocks to watch in 2025 is C3.ai (AI), which offers enterprise AI applications utilized by the U.S. military and numerous Fortune 500 firms.

C3.ai’s AI models deliver accurate insights that empower businesses to operate more efficiently. Organizations using its software have reported significant cost savings, demonstrating the utility and value of C3.ai’s offerings, putting it on a solid growth path.

Although C3.ai is a smaller company with trailing revenue of $346 million, it is scaling effectively. Recent quarterly revenue showcased a 29% year-over-year increase, indicative of accelerated growth over the past year.

With a market capitalization of $4.4 billion, C3.ai's shares are priced at 12 times its sales, which is reasonable for a rapidly growing software enterprise. However, a potential downside is C3.ai's reliance on a limited number of clients for its revenue. Notably, its contract with Baker Hughes accounted for 18% of its revenue last quarter, and this contract is due to end in June.

This risk is slowly diminishing as C3.ai broadens its customer base. In late 2024, Microsoft announced a five-and-a-half-year partnership with C3.ai to bolster its investments in enterprise AI. This collaboration designates C3.ai as the preferred AI application provider on the Microsoft Azure cloud platform, paving the way for substantial revenue growth for C3.ai. Such growth may also improve the company's margins and profitability.

Since the announcement of its deal with Microsoft, C3.ai's stock has risen by 28%. There may still be significant potential for upward movement in 2025, providing investors with meaningful exposure to the expansive growth opportunities in AI software.

The authors are not affiliated with any of the companies mentioned and do not hold any positions in the respective stocks discussed.

AI, Stocks, Investing