2 Top Artificial Intelligence (AI) Stocks That Could Crush the Nasdaq

Key Points

• Sovereign AI systems is a $50 billion per year opportunity, which could benefit AI chip leader Nvidia.

• The success of Meta Platforms' Ray-Ban smart glasses shows it is more than just an advertising business.

• 10 stocks we like better than Nvidia ›

Sticking with industry leaders is all an investor needs to do to run circles around the market indexes. The Nasdaq Composite has returned 26% over the past 12 months, but leading stocks like Nvidia (NASDAQ: NVDA) and Meta Platforms (NASDAQ: META) have doubled that return.

As artificial intelligence (AI) sweeps across the global economy, here's why these stocks are poised to deliver strong growth to help you beat the market.

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

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1. Nvidia

Nvidia's explosive growth led by demand for its high-powered data center chips for AI workloads has fueled the stock higher in 2025. Investors who missed the rally shouldn't feel like it's too late. Organizations around the world are still in the early innings of adopting AI, which spells more upside for investors.

Nvidia's data center business is booming, with revenue up 73% year over year in its fiscal first quarter. The company provides chips for several markets, including gaming, professional graphic artists, and autonomous training systems for cars. But data center is its largest business, making up over 88% of the most recent quarter's revenue.

Investors new to Nvidia should be encouraged to see management pointing to an expanding set of opportunities. For example, CEO Jensen Huang continues to talk about the opportunity in sovereign AI, where governments worldwide are starting to build their own AI systems for national security and dependence from foreign AI models.

Spending on sovereign AI infrastructure is expected to reach $50 billion annually, according to Bank of America. With Nvidia controlling the lion's share of the AI chip market, this will pad the company's revenue over the next decade.

There's growing competition for AI chips, as Nvidia's are costly. Some AI researchers might feel Nvidia's chips are overkill for their needs and may look at lower-cost options from other vendors. But Nvidia is well positioned to remain the leader for large organizations and governments, which is still a big opportunity.

Assuming the Nasdaq doubles again by 2030, Nvidia stock needs to deliver a compound annual return of at least 15% to beat it. Its adjusted earnings grew at a compound annual rate of 83% over the last five years, and Wall Street analysts currently project earnings to grow over 29% per year in the coming years. With the stock still trading within its historical range on a forward price-to-earnings basis, it should follow earnings, pointing to market-beating returns for investors buying shares today.

2. Meta Platforms

Meta Platforms has a strong competitive position in the digital economy, with over 3.4 billion people using its family of apps every day. The stock has nearly doubled the return of the Nasdaq over the past year, up 49% at the time of this writing. While its forward price-to-earnings multiple of 28 has stretched to the high end of its previous three-year range, the company's earnings momentum and progress in capturing growth outside of its core advertising business should justify a higher valuation.

Meta is one of the top digital advertisers, with trailing-12-month revenue reaching $178 billion. Revenue growth has been impressive, up 22% year over year in Q2. Analysts expect earnings to grow at an annualized rate of 17% over the next several years, putting the stock on course to outperform the Nasdaq.

With $71 billion in net profit generated over the past year, Meta's growing digital ad business is providing substantial resources to invest in the best AI engineers and data center infrastructure. This is fueling development of AI tools for advertisers and potentially explosive opportunities from the company's Reality Labs division.

Meta's Reality Labs only generated $370 million of revenue last quarter, with a large operating loss of $4.5 billion. But Meta might be stumbling onto a big opportunity with its AI consumer products. The Ray-Ban smart glasses posted accelerating sales last quarter with demand exceeding supply. Meta is already launching new performance-focused AI glasses in partnership with Oakley to capitalize on growing consumer interest in these products.

Through the first half of 2025, the company reported stellar earnings growth of 37% year over year, significantly outperforming analysts' expectations. The profits from its advertising revenue allow the company to take calculated bets on things like smart glasses, which help bolster Meta's brand as it works to integrate its AI technology into the lives of its customers. Meta is aiming to be its users' everyday superintelligence agent, and this would unlock more growth opportunities over the long term.

Given Meta's profitable advertising business and how AI is benefiting its growth, investors appear to be rerating the stock with its forward P/E potentially heading into the 30s. The stock should continue to grow in value with earnings putting it on track to outperform the Nasdaq over the next five years.

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Bank of America is an advertising partner of Motley Fool Money. John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.