Artificial intelligence (AI) stocks scored major gains over the past two years as investors bet on the power of the technology to revolutionize the world — from our daily lives to how companies operate. Many companies selling products and services to power AI platforms and companies developing AI have seen both revenue and their share prices soar. And early investors in such players have benefited.
Now the good news is, even after recent declines in these growth players, it looks as if the AI story is far from over. In fact, we may be in the early phases of gains, and much more might lie ahead. Analysts predict that today’s $300 billion market could surpass $2 trillion early next decade, offering many companies a huge opportunity.
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But this doesn’t mean we have to wait that long for another big wave of AI-driven stock market gains. I’m optimistic about these growth players’ earnings prospects and share performance potential for this year — and one company in particular could be well positioned to excel. My prediction is this AI stock will be the biggest winner of 2025.
Image source: Getty Images.
Why AI stocks have declined
So, first, a quick note about why AI stocks have declined in recent weeks. It hasn’t been linked to any slowdown in this hot technology or problem for any single company. Instead, it’s related to general concerns about economic growth, triggered by President Trump’s plan to impose tariffs on imports. Investors have worried that higher prices on goods could lift costs for companies — and prompt their customers to spend less.
But indexes and stocks have recovered some of their losses amid positive news: The U.S. has struck initial trade deals with the U.K. and China, and talks are under way with other countries too. There’s also optimism that tariff levels won’t be as high as originally expected and that any eventual tariffs on electronics — exempted so far — will be at reasonable levels.
Against this backdrop, my prediction is AI chip leader Nvidia (NASDAQ: NVDA) will be the biggest winner of 2025. Why am I so confident about this stock in particular? Nvidia has proved it can quickly adapt to challenges thrown its way. For example, when the U.S. originally launched export controls on AI chips to China, Nvidia developed a chip that met guidelines — and in more recent days, as Trump spoke of his import tariff plan, Nvidia launched an initiative to invest in manufacturing in the U.S., a move that will eventually make it less sensitive to any such duties.
The ability and resources to handle challenges
This resourcefulness and ability to tackle problems is an asset during periods of uncertainty and should offer investors confidence in the company. And Nvidia’s $53 billion in cash means it has the financial resources to support growth and handle challenges.
I’m also confident about Nvidia’s ability to stand out this year thanks to messages from its major customers: They plan to keep on spending heavily on AI, and because of their interest in building the strongest AI platforms possible, it’s likely much of that business will go to Nvidia. Companies including Microsoft, Amazon, and Meta Platforms recently have confirmed their AI growth plans, dispelling investors’ concerns that a slowdown in AI spending may be on the horizon.
On top of this, Nvidia has reported solid growth through the first quarter and high demand for something that could spur the next wave of revenue growth: inference power. Reasoning models “think over” problems longer to produce better answers and need top graphics processing units (GPUs) to supercharge this process. Nvidia’s GPUs are the most powerful around, and the company’s new Blackwell architecture was constructed with inferencing needs in mind — so this should drive considerable growth for Nvidia in the quarters to come.
The biggest risk right now
Of course, even the brightest of situations include some uncertainties or risks, and in Nvidia’s case the biggest right now is its future in China. The U.S. has barred sales of its H20 chip, designed to specifically meet earlier export guidelines, and that resulted in a $4.5 billion charge for the company in the recent quarter. Nvidia has spoken openly about how restricting sales of AI chips to China not only would limit its sales growth but would hurt the U.S.’s potential for dominance in the industry.
I’m optimistic that the Trump administration, that’s expressed its support for AI, will listen to Nvidia’s message and find a solution that won’t penalize U.S. companies. But until a solution is found, this represents a risk for Nvidia.
Still, even with that risk present, Nvidia stock could soar this year for the reasons I’ve mentioned above and any potential positive news about exports to China also could serve as a catalyst. Finally, valuation may offer this player a boost too. The stock, up about 2% this year, is trading for only 32 times forward earnings estimates, down from about 50 just a few months ago. This bargain valuation could increase appetite for the stock, especially for investors who aim to hold on for the long term.
So my prediction is this top AI chip powerhouse will roar higher this year and become the biggest winner of 2025 — and the great news is even if I’m wrong, Nvidia still is well positioned to soar over the long run.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.