3 Top AI Stocks to Buy for the Rest of 2025

Key Points

• Taiwan Semiconductor Manufacturing could continue to build on a strong performance in 2025 thus far.

• A favorable antitrust ruling seems to be the catalyst that Alphabet stock needed.

• AppLovin's revenue is growing at a year-over-year rate of 77%.

• 10 stocks we like better than Taiwan Semiconductor Manufacturing ›

The stock market has been in a bit of a whirlwind since the end of 2022.

That's when ChatGPT broke out, kicking off the artificial intelligence (AI) movement that has sent numerous technology and AI stocks to lofty heights and produced electrifying investment returns in the process.

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 »

It may be difficult for some of these companies to continue to justify increasingly higher stock prices. That said, there are still compelling opportunities in a select few companies that have the growth and valuation to continue performing at a high level over the coming months.

Three contributing Motley Fool analysts identified Taiwan Semiconductor Manufacturing (NYSE: TSM), Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), and AppLovin (NASDAQ: APP) as three winners that can still pack a punch for your portfolio.

Image source: Getty Images.

1. All AI chip roads lead to this red-hot stock

Justin Pope (Taiwan Semiconductor Manufacturing): The AI landscape will undoubtedly evolve, but it's hard to imagine that Taiwan Semiconductor Manufacturing, or TSMC, won't remain one of the biggest AI winners.

The company is the world's leading semiconductor (chip) manufacturer, also known as a foundry.

Nvidia and most other chip companies design the chips used in AI data centers and throughout almost every technological application you can think of. However, they often outsource the actual production of those chips to foundries.

TSMC is the clear industry giant, with an estimated 67% revenue share of the foundry market at the end of last year. The leading AI chip companies are likely going to come to Taiwan Semiconductor Manufacturing for its capacity and leading manufacturing technologies to produce the high-end chips in the quantities needed to support what continues to be rampant demand, as billions of dollars pour into data centers and the chips that go into them.

This wave of AI investment is the key reason why TSMC continues to turn in stellar earnings reports. Additionally, some industry experts believe that trillions of dollars will continue to pour into data centers worldwide over the next five years.

Analysts believe TSMC will grow earnings by an average of 21% annually over the next three to five years. Yet, the stock still trades at just 25 times this year's earnings estimates. In other words, the stock, which has soared by 31% since January, could have more upside ahead.

2. Investors may finally be ready to give one tech giant the respect it deserves

Will Healy (Alphabet): After years of doubting Google parent Alphabet, investors may finally be looking at the stock in a more favorable light.

A U.S. District Court just ruled that the company would not have to sell its Chrome browser because of antitrust concerns. Chrome is a critical part of the company's digital advertising strategy. Even though products like Google Cloud are on track to reduce Alphabet's dependence on digital ads, that segment still generated 74% of the company's revenue in the first half of 2025.

Hence, despite new requirements to share data with competitors, investors saw the ruling as a victory and bid the stock higher.

That gain has taken Alphabet's P/E ratio to 25. Nonetheless, it remains the cheapest "Magnificent Seven" stock, and the ability to invest in itself makes its long-term growth prospects extremely favorable.

Alphabet's $95 billion in liquidity gives the company tremendous optionality. Moreover, it generated an additional $67 billion in free cash flow over the last 12 months. This is critical, as free cash flow also does not include the $75 billion Alphabet pledged to invest in capital expenditures (capex) in 2025.

That investment is also likely to enhance its AI capabilities, a concern for the Google parent since OpenAI released GPT-4 in 2023. Additionally, it can fund the $70 billion in share repurchases it announced earlier this year and its new, growing dividend.

Ultimately, the favorable antitrust ruling seems to have become a catalyst for what was already a solid business that invests heavily in its future growth. Since investors now have a new appreciation for the Google parent, Alphabet stock appears on track to move higher for the rest of the year and beyond.

3. AppLovin's AI-powered ad platform is producing incredible results

Jake Lerch (AppLovin): Unlike many big tech companies, AppLovin isn't your traditional AI stock. It isn't in the semiconductor business like Nvidia or Broadcom. It isn't investing tens of billions into AI research or data centers like Meta Platforms, Alphabet, or Amazon.

Rather, AppLovin is laser-focused on using AI tools to perfect its business niche: digital advertising. And on that front, the results speak for themselves.

AppLovin's crown jewel is its Axon 2, its AI engine, launched in 2023. Axon 2 powers AppLovin's mobile ad platform, helping marketers to deliver value to their clients by finding and targeting the right users, driving higher return on investment for ad campaigns.

In turn, AppLovin's financials have taken flight. In its most recent quarter (for the three months ending on June 30, 2025), AppLovin reported:

• $1.26 billion in revenue, up 77% from a year earlier
• $0.8 billion in net income, up 164% year over year
• 76.5% operating margin, an all-time record

Moreover, AppLovin reported $768 million in free cash flow, and the company repurchased roughly $340 million worth of existing shares as part of its ongoing share buyback plan.

All told, shares of AppLovin have advanced by 75% year to date, despite a big pullback at the start of the year. Since 2022, shares are up 2,000%, having generated a compound annual growth rate (CAGR) of 173%.

Granted, there are risks to owning AppLovin stock. Given its enormous run, its stock sports a lofty valuation. Its price-to-sales (P/S) ratio is 37. That's high for any stock, but it's also high for AppLovin itself, which has a lifetime average P/S ratio of around 11.

Nevertheless, for investors seeking out a hypergrowth stock within the AI sector, AppLovin is worth a look thanks to its remarkable financials and innovative, AI-powered platform.

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Jake Lerch has positions in Alphabet, Amazon, and Nvidia and has the following options: long September 2025 $210 calls on Amazon and long September 2025 $210 puts on Amazon. Justin Pope has no position in any of the stocks mentioned. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.