The best AI stocks to invest $500 in this year

Artificial intelligence (AI) was a theme that drove the market last year, with AI stocks helping S&P 500the Nasdaqand the Dow Jones Industrial Average each rises in the double digits. Companies that sell AI tools and services saw earnings soar, and investors flocked to these players. The initial wave of AI growth focused on building this infrastructure and training models to solve the complex problems of tomorrow.

Now, in the early days of 2025, there is reason to be optimistic about another big year for AI as infrastructure construction continues. Nvidia (NASDAQ: NVDA ) CEO Jensen Huang has said that about a trillion dollars worth of computers worldwide need to be upgraded for accelerated computing, and that doesn’t happen overnight. In addition to this, 2025 may be the year of agentic AI, or AI agents that can reason, develop a solution to a problem, and implement it. This and other real-world applications could be transformative for businesses and industries.

The great news is that you don’t need to invest a fortune in 2025 to potentially win in this growth area. Here are the best AI stocks to invest around $500 in this year.

Nvidia has been the star of the AI market thus far, and is well positioned to maintain that success. The company is present at all stages of AI development, from chips to power model training to software to apply AI to the needs of businesses and organizations around the world.

As a result, Nvidia’s double-digit and triple-digit revenue growth likely has a lot more to go. To make the story even brighter, the AI leader is firmly committed to innovation, promising to update graphic processing units (GPU) annually. This should make it very difficult for rivals to beat Nvidia: by the time they catch up, Nvidia is already launching a new product.

Speaking of new products, the company is in the midst of a major launch right now. Its Blackwell architecture has seen “amazing” demand, according to the company, and will generate billions of dollars in revenue in its first few months on the market. So Nvidia stock could be headed for another surprising gain in 2025.

alphabet (NASDAQ: GOOG ) (NASDAQ: GOOGL ) is the least expensive of the “Magnificent Seven” tech stocks that have driven the market’s gains in recent times. The stock trades at 21 times forward earnings estimates, a bargain given its long track record of earnings growth and strong future prospects.

You probably know Alphabet through its Google Search, the most widely used internet search platform in the world. Advertising on Google equates to billions of dollars in revenue for Alphabet every quarter.

But Alphabet is also building strengths in AI, which is helping another source of revenue, Google Cloud, grow rapidly. Google Cloud recently passed the milestone of $10 billion in quarterly revenue and $1 billion in quarterly operating income.

The service sells AI tools to customers, backed by its own Gemini Large Language Model (LLM). Alphabet also uses AI to further improve Google Search and help advertisers reach the best audiences for their products. All of this could mean a big win for Alphabet, and its investors, in the AI boom.

Amazon (NASDAQ: AMZN ), like Alphabet, benefits from AI in two ways. The e-commerce giant is a user of AI to improve its operations and sells AI products and services through its cloud computing business, Amazon Web Services (AWS).

As you probably know, Amazon is an e-commerce giant, and the company’s investment in AI could help this billion-dollar business generate even more profit over time. Amazon is applying AI tools to make its fulfillment process more efficient, for example by designing the best delivery route to save time and money.

AWS has already demonstrated success in AI, achieving an annualized revenue rate of $110 last year. AWS is focusing on every “layer” of AI, from offering customers a wide range of chips to power their projects to a fully managed service with LLM to customize. Amazon is also present in the app space and recently launched Project Amelia, an AI agent for sellers on its e-commerce platform.

Amazon will benefit from the next wave of AI growth, making it an ideal bet for 2025.

Ever feel like you’ve missed the boat on buying the hottest stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock. recommendation for companies that believe they are about to exit. If you’re worried that you’ve already missed your investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves:

Nvidia: if you invested $1,000 when we doubled in 2009, you would have $353,272!*
Apple: if you invested $1,000 when we doubled in 2008, you would have $45,049!*
Netflix: if you invested $1,000 when we doubled in 2004, you would have $457,459!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another opportunity like this anytime soon.

See 3 “Double Down” actions »

* Stock Advisor returns from January 13, 2025

John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Adria Cimino has positions on Amazon. The Motley Fool has positions and recommends Alphabet, Amazon and Nvidia. The Motley Fool has one disclosure policy.

The best AI stocks to invest $500 in this year was originally published by The Motley Fool

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