2 No-Brainer Artificial Intelligence (AI) Stocks to Buy Before 2025

Core Viewpoint - The year has been strong for artificial intelligence (AI) stocks, with companies benefiting from the technology seeing significant business improvements and share price gains [1] Group 1: AI Market Growth - AI spending is projected to increase from $235 billion in 2024 to $337 billion in 2025, representing a nearly 50% year-over-year growth [2] - The AI server market is expected to grow by 55% in 2025, generating an estimated $252 billion in revenue [14] Group 2: Taiwan Semiconductor Manufacturing (TSMC) - TSMC is the largest semiconductor foundry, manufacturing chips for major companies like Nvidia and Apple, and is positioned to benefit from the rising demand for AI data center chips [4][5] - AI GPU revenue is anticipated to rise by 27% in 2025, while demand for high-bandwidth memory (HBM) could increase by 70% [6] - Shipments of generative AI-capable smartphones are expected to grow by 73%, and AI-capable PCs by 165% in 2025, providing further growth opportunities for TSMC [7] - TSMC's revenue has increased by 32% year-over-year in the first 11 months of 2024, with November's growth accelerating to 34% [8] - The company's revenue is projected to grow by 25% in 2025, with earnings expected to increase by the same margin [9][10] - TSMC is trading at 22 times forward earnings, which is lower than the Nasdaq-100 index's forward earnings multiple of 28, indicating an attractive valuation [10][11] Group 3: Dell Technologies - Dell's shares have recently declined following disappointing fiscal Q3 results, making the stock more attractive at a trailing earnings multiple of 21.6 and a forward multiple of 12.5 [12][13] - Dell's revenue from its infrastructure solutions group (ISG) grew by 34% year-over-year to $11.4 billion, driven by the demand for AI servers [14] - The company sold $2.9 billion worth of AI servers last quarter and has a backlog of $4.5 billion, indicating strong future demand [15] - Dell is also positioned to benefit from the growth in AI-enabled PCs, with management noting that customers are aligning upgrade cycles with new AI PCs [16][17] - Earnings growth for Dell is expected to accelerate to $7.82 per share, with potential earnings of $9.40 per share in fiscal 2026, which could lead to a stock price increase of 125% from current levels [18]