It’s been another great year for artificial intelligence (AI) stocks. If you throw a dart at a list of AI stocks taped to the wall, there’s a good chance you’ll hit the one with a big rally in 2024.
However, many analysts believe that a significant number of AI stocks that soared this year could lose momentum next year. But for some, the good times may continue. According to Wall Street, these two AI stocks could roughly more than double in 2024 and rise even more in 2025.
broadcom
broadcom’s (AVGO 1.13%) The stock price has nearly doubled since the beginning of the year. In fact, until just a few days ago, stocks had more than doubled since the start of the year, but the Fed’s reluctance to predict as many rate cuts as investors expected in 2025 led to the stock market’s decline. .
What’s interesting about Broadcom’s impressive performance is that its recent quarterly results haven’t been all that great, excluding the impact of the VMware acquisition. But investors continue to be excited about the AI opportunity. Management is also excited. “We believe the opportunities for our company over the next three years in the AI field are huge,” Chief Executive Officer Hock Tan said during the company’s fourth-quarter earnings conference this month.
In particular, Broadcom should benefit from the fact that some large companies are developing their own custom AI accelerators. These efforts involve millions of AI accelerator clusters and require networking. Management believes this will be a $60 billion to $90 billion market in fiscal 2027, and believes the company will be a top player within it.
Even after Broadcom’s stock has risen significantly this year, Wall Street remains overwhelmingly bullish on the stock. Of the 43 analysts surveyed by LSEG in December, 38 rated Broadcom a “buy” or “strong buy.” Five other analysts gave unchanged ratings.
But most analysts don’t expect the stock’s meteoric rise to continue. The average 12-month price target for the company’s stock is only 4% above current levels, but the most optimistic analysts surveyed by LSEG think Broadcom stock could rise another 35%. are.
Nvidia
Nvidia (NVDA 3.08%) is about to make impressive profits over the years. The stock price soared nearly 239% in 2023. Despite falling into correction territory in recent weeks, it is still up more than 160% year-to-date into 2024.
Unlike Broadcom, Nvidia doesn’t need an asterisk next to its impressive financial results in recent quarters. The GPU maker’s third-quarter revenue rose 94% year-over-year to $35.1 billion, a record level. Much of that success is due to the explosive growth in demand for GPUs in data centers. And much of that explosive growth is due to AI.
Management does not expect growth to slow anytime soon. Demand for new GPUs based on the Blackwell architecture exceeds supply. CEO Jensen Huang said demand for Blackwell has been “tremendous” in comments on the company’s third-quarter earnings call.
Wall Street is still obsessed with Nvidia. A whopping 62 out of 64 analysts covering the stock by LSEG rated it a “buy” or “strong buy” in December. Two outliers recommended holding. Nvidia’s average 12-month price target is nearly 32% above the current stock price.
Are AI stocks better in 2025?
I don’t always agree with the opinions of Wall Street analysts (sometimes wise, sometimes not). However, in this case, I think they are correct in seeing Nvidia as a better AI stock than Broadcom in 2025.
The launch of Nvidia’s Blackwell chips should fuel sustained revenue and profit growth for the company through next year. It is almost certain that even more powerful AI chips will be announced in the second half of 2025. I’d be surprised if Nvidia stock doesn’t jump another 30% or more over the next 12 months, but I don’t expect it to be the same. This is an increase in levels seen in 2023 and 2024.
Keith Speights has no position in any stocks mentioned. The Motley Fool has a position in and recommends Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
