AI Stocks with Potential Growth in the Later Half of 2025
In the rapidly evolving world of technology, two giants – Alphabet (GOOG/GOOGL) and Amazon (AMZN) – are gearing up for growth in the second half of 2025, driven by their AI investments and resilient core businesses.
### Alphabet (GOOG/GOOGL)
The first half of 2025 saw a moderate decline in Alphabet’s stock, contrasting with other AI-focused companies like Microsoft and NVIDIA. However, the tech behemoth managed a 12% year-on-year revenue growth, reaching $90.2 billion, with Google Cloud revenue surging 28% to $12.3 billion.
Alphabet's dominance in Google Search, with a 90% market share, and YouTube's significant earnings, surpassing those of Netflix, underscore the company's resilience. Despite concerns about AI tools diminishing search ad clicks, no tangible impact has been observed thus far.
Alphabet's strategic position in the AI pipeline, from R&D to real-world applications, offers a competitive edge. Google Cloud Platform, while trailing AWS, leads in AI and machine learning infrastructure tools, presenting growth opportunities.
Trading at a forward P/E of 18.5, below the S&P 500 average and peers, Alphabet appears undervalued. Improving profitability, despite heavy AI investments, is reflected in the company's record 40% operating margins in Q1 2025. Analysts anticipate strong stock performance if the market acknowledges Alphabet's AI and core business strengths.
### Amazon (AMZN)
Amazon's stock performance in the first half of 2025 was relatively stable, posting a 0% move. The company's global supply chain scale suggests resilience against import tariffs, enabling continued operations and growth.
Amazon Web Services (AWS) remains the leader in cloud infrastructure, and its AI services are integral to AWS's growth. This positioning positions Amazon well to capitalise on the AI infrastructure buildout and service expansion, a critical driver for future growth.
While specific details on Amazon's tariff resilience are not readily available, its adaptable product range and wide selection of sourcing countries make it well-equipped to navigate an import tariff environment.
### Summary
Both companies are positioned for growth in the latter half of 2025, backed by their AI investments and resilient core businesses. Alphabet's strong AI capabilities and undervalued stock suggest significant upside potential, while Amazon's AWS leadership keeps it a key player in AI infrastructure and services.
The uncertain tariff situation, coupled with improved market sentiment and the solid outlooks of certain companies, makes now an opportune time to invest in AI stocks.
- In the subsequent half of 2025, Alphabet's strong AI capabilities and undervalued stock positioning suggest notable growth potential, bolstered by its resilient core businesses.
- Amazon, with its dominance in AI services through Amazon Web Services, is well-positioned to capitalize on the AI infrastructure buildout and expansion, while maintaining a key role in the AI sector.
- Considering the volatile tariff situation and the positive outlook of certain companies in the AI sector, this time presents a promising opportunity for investors to consider venturing into AI stocks.
