Investing

2 Stocks to Play the AI Revolution in 2025

Joey Frenette

Published: January 2, 2025 10:30 am

The artificial intelligence (AI) revolution is far from over. Just ask Wedbush Securities’ Dan Ives, who’s still pounding the table on the AI-driven rally in tech stocks for the new year. With eyes on new highs for the tech- and AI-heavy Nasdaq 100 and more innovation to come from some of the names in AI software, it’s hard not to be optimistic about the market darlings, even if they’re ending 2024 with a bit of a mild slump.

In this piece, we’ll check out two tech stocks that could make the most of the AI revolution in 2025. Of course, investors should always be ready to take advantage of pullbacks, especially since we’re likely overdue for a fairly nasty one. Without further ado, here are two names that may still have room to roar as the AI boom begins pulling in profits for firms beyond the chipmakers.

Tesla

Tesla (NASDAQ:TSLA) stock really hit the accelerator in the fourth quarter of 2024. While TSLA shares certainly look “peaky” after the latest pole-vaulting to new highs, I do think the premium—125 times forward price-to-earnings (P/E)—is not as hefty as it looks, especially if the electric vehicle (EV) giant’s autonomous driving efforts break ground in 2025.

More recently, though, it’s been mostly concerning news, with nearly 700,000 Tesla Cybertrucks being recalled over tire-pressure monitoring system issues. Could another recall weigh on the brand image? It’s certainly not hard to imagine many Tesla customers are feeling like switching brands come their next vehicle purchase. Either way, that purchase will likely be many years down the road, making the Cybertruck recalls a distant memory to be forgotten.

In any case, recalls are never great to hear of, especially if there have already been prior recalls. Sooner or later, customers will get fed up. But with such a massive fanbase surrounding Tesla and Elon Musk who will be quick to forgive the firm for any small mistakes, don’t be so quick to discount the brand after the latest hiccup.

Personally, I think the latest recall rollover in TSLA shares could prove a buying opportunity for those who missed the initial run-up. Why? Autonomous robotaxis remain the name of the game. They look likelier than not to get more green lights in the new year under Donald Trump.

According to Dan Ives, who recently hiked his TSLA stock price target to $650 from $515 per share, entailing another 26% gain from here, full self-driving (FSD) tech is a real catalyst for growth as too as the firm’s other AI efforts. Of course, it’s tough to tell for sure how quickly Cybercab will get rolling along under Trump. If Trump does “fast track” the effort, perhaps Ives’ prediction of a $2 trillion market cap within the next 18 months is very much within reason.

If Cybercab is the next big growth driver, perhaps TSLA stock has the means to grow into its pie-in-the-sky multiple.

Apple

Apple (NASDAQ:AAPL) stock may still have AI upside in the cards for 2025, at least according to Wall Street bulls like Ives. Of course, we’ve all heard about that so-called “AI-driven iPhone supercycle” by now. Apple Intelligence is here, and it’s yet to happen. However, according to Ives, who sees Apple shipping 240 million iPhones in fiscal year 2025, patience could be rewarded going into the new year.

Mr. Ives sees the AI supercycle dragging out over many years. And while traders may lack the patience to stick around that long to get the most out of the AI upside, I do think that much of the gains could be front-loaded if Apple manages to hit Ives’ iPhone shipment target. Also, let’s not forget about Apple’s potential to gain ground in China. Ives thinks the region could be a source of strength, with around 100 million iPhones overdue for an upgrade.

Also, look for Apple to make a splash in the home with rumors pointing to a potential “AI wall tablet” that may be up ahead. Indeed, an iPad on one’s wall seems quite confusing. Either way, it’s these products, and many like them, that have the potential to further expand the ecosystem as we move further into the AI age. As such, they shouldn’t be discounted by investors looking to hold on for the next 10 years.

Yes, AAPL stock isn’t cheap at over $250 per share (a stock split could be warranted by year’s end). However, I do think Ives is right on the money when he says the company is on “a multi-year AI journey that will define the future for Apple.” It may truly be a “golden era” for the firm as Ives eyes new highs and a move past a $4 trillion market cap—something that could happen within just a few short weeks.

Of all the consumer-facing AI companies out there, it’s hard to name one with as much of an edge as Apple. It’s hard to love Apple stock after its hot run, especially with all the Apple Intelligence skeptics out there. That said, AAPL stock will probably continue to be a play that punishes the shorts in 2025.