A Once-in-a-Decade Investment Opportunity: The Best AI Stock to Buy in 2025, According to a Wall Street Analyst

Dan Ives at Wedbush Securities made a number of prescient calls last year. Perhaps most impressive was his prediction that the Nasdaq Composite would reach 20,000 in 2024 as the artificial intelligence boom drove technology stocks higher. Ives remains bullish in 2025.

The first three industrial revolutions were driven by technological innovations in steam power, electricity, and microprocessors, and Ives sees AI as the driving force behind the fourth industrial revolution. Investment opportunities of that magnitude come along maybe once in a decade, perhaps even less often.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »

Importantly, during a recent Bloomberg interview, Ives selected Nvidia (NASDAQ: NVDA) as his top stock pick for 2025 due to the company's central role in the artificial intelligence economy. Read on to learn more.

Nvidia is the reason modern artificial intelligence is possible

Nvidia graphics processing units (GPUs) are the industry standard in accelerating complex data center tasks like training large language models and running artificial intelligence (AI) applications. Analysts estimate the chipmaker has between 70% and 95% market share in AI accelerators. And Forrester Research says, "Without Nvidia's GPUs, modern AI wouldn't be possible."

In a recent note, Joseph Moore at Morgan Stanley wrote, "The market tends to underestimate the difficulty of competing with Nvidia." Indeed, analysts generally expect the company to maintain its dominance for at least two to three years. One reason for that confidence is Nvidia's CUDA platform, a robust ecosystem of code libraries and pretrained models that simplifies the development of AI applications.

Another reason for that confidence is the company's full-stack approach to accelerated computing. Nvidia is best known for GPUs, but its product portfolio also includes central processing units (CPUs), interconnects, and networking equipment. That vertical integration lets the company build systems with a superior total cost of ownership, according to CEO Jensen Huang.

Christopher Rolland at Susquehanna recently wrote, "Nvidia has become the world's de facto enabler of AI." He attributed that success to vertical integration spanning chips, adjacent data center hardware, and software. Overcoming that advantage is more complicated than developing better accelerators. Instead, competitors would need an entire ecosystem of hardware and software comparable to what Nvidia offers.

Image source: Getty Images.

Ives says the artificial intelligence revolution is entering a new phase

Dan Ives recently wrote on X (the platform previously known as Twitter), "The AI revolution is entering a new stage of growth and Nvidia and Jensen continue to be the foundation for this 4th industrial revolution." Also, in a recent CNBC interview, Ives identified two catalysts that could send Nvidia shares higher: the Blackwell GPU and physical AI.

Blackwell is Nvidia's next-generation GPU architecture. Compared to the previous Hopper generation, Blackwell can complete AI training tasks up to four times faster and AI inference tasks up to 30 times faster. Production of Blackwell started to ramp up in the fourth quarter of fiscal 2025, which ends in January 2025, so Nvidia should see substantial revenue from the new chip this year.

CEO Jensen Huang believes, "The Blackwell architecture platform will likely be the most successful product in our history and even in the entire computer history." He also told attendees at the 2025 CES, "The next wave of AI is here. Robotics powered by physical AI will revolutionize industries."

Ives believes Nvidia has a $1 trillion opportunity in physical AI as self-driving cars and robotics become sizable markets in the next decade. Importantly, Nvidia has already positioned itself to be a long-term winner. Like its strategy with generative AI, the company has a full-stack computing solution for autonomous robots spanning data center infrastructure, software development tools, and embedded processors.

Nvidia stock trades at a surprisingly reasonable valuation

Dan Ives is not alone in selecting Nvidia as a top stock pick for 2025. Harsh Kumar at Piper Sandler recently wrote, "We are making Nvidia our top large-cap pick given the company's dominant position in AI accelerators and the upcoming launch of the Blackwell architecture."

Wall Street expects Nvidia's adjusted earnings to increase by 39% annually through fiscal 2027, which ends in January 2027. That makes the current valuation of 55 times adjusted earnings look very reasonable. But Ives believes that the consensus figure underestimates earnings by as much as 30% over the next few years.

Whether he is correct or not, investors with a time horizon of three to five years should feel comfortable buying a small position in Nvidia today. However, investors should not limit themselves to a single "best" AI stock. It would be more prudent to build a basket of AI stocks that cover different areas of the AI economy, such as data center infrastructure, cloud services, and software.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful 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 they think are about to pop. If you’re worried you’ve already missed your chance to invest, 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 down in 2009, you’d have $369,816!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,191!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $527,206!*

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

Learn more »

*Stock Advisor returns as of January 21, 2025

Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.