Title: Top 3 AI Stocks to Invest in This January
In the world of stocks, AI was a major theme in 2024 and looks set to continue its rise in 2025. Let's explore three AI stocks to invest in this month.
1. Nvidia
Nvidia (NVDA -3.00%) has been the key benefactor of the AI boom, witnessing a 125% revenue increase in fiscal year 2024. This figure is set to double again in 2025, thanks to its graphics processing units (GPUs) being at the heart of AI infrastructure development.
The company's powerful GPUs are perfect for handling large language model (LLM) training and AI inference. This, combined with a 90% market share over competitor Advanced Micro Devices, has positioned Nvidia as the industry leader. Their superior software platform CUDA provides developers with seamless tools to program GPUs for various AI tasks.
Microsoft, Nvidia's largest customer, has pledged to spend around $80 billion on AI data centers this year. Half of this spending typically goes towards servers with GPUs. With other major companies also increasing their AI infrastructure expenditures, Nvidia still has plenty of growth opportunities ahead.
Despite a strong performance, Nvidia's forward price-to-earnings ratio (P/E) is 31.5, based on 2025 analyst estimates, and its price/earnings-to-growth ratio (PEG) is 0.98. A PEG below 1 often indicates undervalued stocks, meaning growth stocks like Nvidia typically trade with PEGs well above 1.
2. Microsoft
Microsoft is investing heavily in AI this year, and it makes sense when you consider its cloud computing service Azure's impressive 33% revenue growth in the last quarter, and a doubling in Azure OpenAI usage in the last six months. This can be attributed to users leveraging Azure's services to develop their AI agents and applications, leading to increased usage of Microsoft's data and analytics services.
Although Azure's growth has been strong, it could be even more substantial if capacity constraints were addressed. Microsoft is addressing this issue by investing heavily in global data centers, which should further accelerate AI adoption and growth.
Beyond cloud computing, Microsoft has another advantage in the AI market thanks to its AI assistant copilots for its Microsoft 365 productivity suite. For $30 a month per enterprise use, Microsoft provides AI copilots with capabilities like email organization, PowerPoint presentation creation, and Python programming in Excel, saving users time and boosting productivity.
Trading at a P/E of 32.5 based on current fiscal year estimates, Microsoft's valuation is reasonable.
3. Salesforce
Salesforce (CRM -2.77%) is aiming to lead the way in agentic AI, the next evolution of AI beyond generative AI. With agentic AI, AI agents can take tasks to the next level by completing end-to-end software engineering tasks, answering customer service calls, and even booking vacations.
Salesforce launched its Agentforce platform in October, providing pre-built AI agents that customers can customize using its no-code and low-code tools. These out-of-the-box agents cover areas like sales, marketing, recruiting, and customer service. Salesforce has already seen rapid adoption, with over a thousand teams using Agentforce as of mid-December. Agentforce is a consumption product that costs $2 per conversation, presenting a major growth opportunity for the company.
Trading at a reasonable valuation of 29 times fiscal 2026 earnings and a PEG of 0.8, Salesforce is an attractive option for investors seeking to benefit from the growth of agentic AI.
- For aspiring investors seeking to diversify their portfolio into the field of finance, considering companies that are heavily investing in AI technology like Microsoft could be a wise decision.
- To maximize returns on your investment, it's worth considering companies such as Nvidia, which have shown significant growth in the AI industry and continue to innovate in this sector, like by developing powerful GPUs for handling large language model training and AI inference.
