It seems clear that 2024 was the year of artificial intelligence (AI) — or was it? Although some of the market’s biggest winners were AI stocks, they weren’t uniformly top performers. If you had invested in an AI-based exchange-traded fund (ETF) at the beginning of last year, the chance that you would have beaten the market wasn’t great, and if you did, it may have been a slim win.

Consider the performance of some of the most popular AI-based exchange-traded funds: the Global X Robotics and AI ETF, the Robo Global Robotics and Automation Index ETF, the iShares Future AI and Tech ETF, the First Trust Nasdaq AI and Robotics ETF, the Vanguard Information Technology ETF, and the ARK Autonomous Technology and Robotics ETF versus the S&P 500:

BOTZ total return level, data by YCharts.

So what should you do this year? Choose AI stocks carefully and balance them with a mix of other stock types. If you invest in ETFs, make sure they’re broad, or purchase a few in different categories to offset risk while maximizing your potential for gains.

Nvidia (NVDA 3.10%), Palantir Technologies (PLTR 3.65%), Taiwan Semiconductor Manufacturing (TSM -1.53%), Amazon (AMZN 2.39%), and Broadcom (AVGO 3.50%) are all top choices for excellent AI stock picks in 2025.

1. Nvidia: More than generative AI

Nvidia is unquestionably the stock most associated with AI. That’s because it practically has a monopoly on the graphics processing units (GPUs) necessary to handle the workload that makes generative AI possible. Some analysts believe it has as much as 95% of the market for these GPUs although competition is heating up.

Nvidia isn’t worried, though. Not only is its lead quite stable, at least in the near term, but it’s also expanding its repertoire with new technology to tackle new solutions for other kinds of technology.

Before generative AI became the best innovation since sliced bread about two years ago, it was already a highly successful company, if less familiar, for its chips that powered the gaming industry. So it’s much more than a one-trick pony, even though it still has a powerful business in generative AI.

2. Palantir: AI for large organizations

Palantir was the dark horse candidate for AI superpower, but since launching its AI Platform, or AIP, in 2023, its business and stock have exploded.

The company helps large organizations, including governments, capture and organize vast amounts of data, creating patterns and deciphering information. Its sales hinge on large contracts, and it closed 104 deals in the 2024 third quarter. Not only are sales rising at a high rate — 44% in the third quarter — but it’s extremely profitable and generating increasing free cash flow.

Palantir stock soared 340% last year and has become quite expensive. But the opportunity is still underappreciated, and 2025 should be another strong year.

3. Taiwan Semiconductor: The company behind the chips

Taiwan Semiconductor is a foundry (or manufacturer) of all kinds of semiconductors and GPUs. It works with most of the chipmakers you know, like Nvidia, which design chips but don’t actually produce them.

Although its chips are not at all limited to AI, that’s where the opportunity is today. What makes the company such a reliable long-term bet is that even if there are new challengers to Nvidia, and even if AI gets displaced to make room for the next trend in technology, Taiwan Semiconductor will still be there to manufacture the chips to make it all possible.

That’s for way into the future. In 2025, it’s in position to demonstrate excellent performance as demand for generative AI continues to accelerate.

4. Amazon: Bringing practical AI to businesses

Amazon is creating generative AI solutions for all different kinds of companies. It has launched a multibillion-dollar business offering a large assortment of services for its cloud computing clients through its Amazon Web Services (AWS) platform.

It has its 3-layer system, which provides tools for programmers to develop their own custom large-language models (LLMs); the Bedrock layer, for programmers to use Amazon’s LLMs; and the top layer, ready-to-use solutions for small enterprise customers.

Management thinks this is just the tip of the iceberg, and the generative AI business presents massive opportunities for Amazon in 2025 and beyond.

5. Broadcom: Connecting all the parts of AI

Broadcom is a technology infrastructure company that has pivoted to harness the power of AI, gearing its business to tap into those opportunities. It provides the semiconductors and infrastructure that make connections between software and hardware, and you can already imagine how it’s necessary for AI, which needs specialized chips to run data at lightning-fast speeds.

Like the other stocks on this list, what makes Broadcom so attractive as an investment is that it has incredible tailwinds heading into 2025 with untapped opportunities in AI, but it also has a large and varied business that won’t fade away when the AI bandwagon slows down.