The stock market is quietly staging a comeback following a rough start to 2025. While still down about 9% year to date as of this writing, the innovation-heavy Nasdaq Composite index has rallied by more than 16% from its recent low.
Signs that the Trump administration is willing to adjust some of the sweeping changes in trade policy and negotiate bilateral deals have helped de-escalate fears of a broader trade war. There are still plenty of uncertainties for investors to balance, but also a renewed sense that the big picture remains positive. With the first-quarter earnings season underway, early results from tech leaders are showcasing underlying sector resilience and the ongoing transformative impact of artificial intelligence (AI) as a major market theme.
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Let's take a look at three AI stocks that could be poised to make a big bull run.
Image source: Getty Images.
Despite solid growth and record profitability, shares of Adobe (NASDAQ: ADBE) are down about 38% from their 52-week high. The tech giant, recognized for its industry-leading creative media software like Photoshop and Premiere Pro, is capitalizing on strong demand for innovative AI and machine learning features integrated across its app ecosystem.
In the company's fiscal 2025 first quarter (for the period ended Feb. 28), revenue climbed by 10% year over year, alongside a 13% increase in adjusted earnings per share (EPS), with management forecasting further increases for 2025.
The market seems skeptical as to whether Adobe's early AI success will last, as one reason to explain its stock price weakness. Specialized AI companies like privately held Canva and OpenAI have introduced competing AI-powered text-to-image and video generation features, representing emerging competition to Adobe's industry dominance. However, the company's reputation for quality and its loyal customer base, attracted to its professional-grade capabilities, provide plenty of reasons to be optimistic.
Notably, the stock's valuation is compelling, trading at just 18 times its consensus 2025 EPS as a forward price-to-earnings (P/E) ratio, well below the company's five-year average forward price-to-earnings ratio. Adobe appears undervalued and well positioned to rebound if it continues to deliver on its financial targets.
ADBE PE Ratio (Forward) data by YCharts
Shares of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) surged following a better-than-expected first-quarter earnings report. Revenue grew by 12% year over year, which propelled a massive 49% increase in adjusted EPS for the period ended March 31.
The company's AI strategy is paying off, driven by Google Cloud Platform (GCP), which offers AI infrastructure and generative AI solutions that are gaining market traction at the enterprise level.
Alphabet's latest AI model, Gemini 2.5, is delivering breakthrough performance, translating directly into to higher advertising conversions across Google Search and YouTube. With over 270 million paid subscriptions for services like YouTube Premium and Google One, the company is diversifying its business and generating high-quality cash flow. Management's confidence in the outlook is reflected in a new $70 billion share repurchase authorization and a 5% increase in the quarterly dividend rate.
With the stock still down 22% from its 52-week high, Alphabet is a buy-the-dip opportunity poised to rally higher.
SoundHound AI (NASDAQ: SOUN) is another tech stock that deserves a closer look following a deep stock price sell-off. Shares are down approximately 52% year to date as of April 25, an extreme correction that doesn't seem justified considering the company's phenomenal growth momentum.
The company is capturing strong demand for its voice-AI technology, representing a more natural and intuitive method for people to interact with AI-powered applications. In 2024, revenue reached $84.7 million, climbing 83% compared to 2023. For 2025, SoundHound expects revenue to nearly double, forecasting a range between $157 million and $177 million. The bullish case for the stock is that these trends are just getting started, with the company exploring a growing number of use cases, including hands-free in-vehicle AI car assistants, customer service chatbots, and voice-enabled ordering for restaurants.
With the potential to consolidate its position in an estimated $140 billion addressable market, SoundHound AI remains well positioned to reward shareholders over the long run.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe and Alphabet. The Motley Fool has a disclosure policy.