artificial intelligence or AI has been the center of attention for investors over the past few years and some executives are saying that AI is bigger than the creation of the internet and I can't necessarily say I disagree when it comes to AI the king of AI has been Nvidia who has the most powerful chips on the market and it is now the largest company in the world since the start of 2023 shares of Nvidia have climbed an impressive 800 70% not a bad return in such a short period of time but not something to expect moving forward however today's video is not about Nvidia it is about Ai and we're going to take a look at six of the top AI stocks to buy for 2025 so before we take a look do me a huge favor show your appreciation by clicking that like button down below subscribe to the channel and let's jump into it [Music] hey everyone Mark rusen here back for another video as always I'm a CPA and not a financial adviser so please do not take this as Financial advice and before we begin let me thank today's video sponsor which is the mle fool the mle fool has a ton of great resources and products available for investors of all different levels and right now if you go to full. com slm Mark you could sign up to receive their 10 best stocks to buy right now all right let's jump back into our video taking a look at six top AI stocks to buy in 2025 beginning with our first AI stock which is going to be Microsoft stock ticker Ms ft I know in the beginning I talked about the king of AI as it pertains to chips being Nvidia but outside of chips many believe that Microsoft is the leader as they took a little bit of a different approach getting into AI by investing their way they invested in a little own company called open AI which built a little known platform called chat GPT chat GPT has revolutionized the world and these types of AI models are being put in so many softwares and products for Microsoft specifically the company currently has a market cap of $3. 1 trillion the second largest company by market cap and over the past 12 months shares have climbed 10% this may be the opportunity that you've been waiting to invest in a company like Microsoft and if you've watched any of my prior videos you know I love investing in companies that have Diversified Revenue streams and that is Microsoft as they earn revenues from cloud from subscriptions from software from hardware and the list goes on over the past 12 months Microsoft has generated $73 billion in free cash flow and they operate with a free cash flow margin of 28.
6% looking here at this fast graphs chart we can see that analysts are looking for earnings to grow 10% in 2025 15% in 2026 and 19% in 2027 increasing the growth rate is what I love to see as an investor using next year's EPS estimate shares of Microsoft are trading at a forward PE multiple of 32. 1 times or 27. 8 times using June 2026 estimates this compares to their 5-year average of 34.
7 and their 10-year average of 29. 5 analysts are upbeat on the stock rating shares of Microsoft a strong buy with a 12-month price target of $497 implying nearly 20% upside from current levels today's price point is okay anyone that bought at this price point I wouldn't have any questions about it but for me already owning the stock the position I'm looking to get back into Microsoft and add to my share count is going to be closer to $360 per share I believe Microsoft has a very long Runway of growth moving forward and AI is going to play a critical role and that leads us to the second AI stock on our list which is going to be broadcom stock ticker AV goo so with Nvidia being a huge chip maker broadcom is right there being another massive chip maker with a big emphasis on artificial intelligence broadcom has been able to increase its share price at a strong clip while also increasing its dividend at a strong clip making it the ultimate compounder of wealth the company currently has a market cap of $767 billion and over the past 12 months shares have climbed 70% who says dividend stocks can't keep up with gross stocks broadcom 2 is diversifying its revenue streams as they have finally Consolidated their acquisition of VMware which is not only going to diversify its product line but also add to the Future growth moving forward and I know we just talked about Microsoft and open AI with chat GPT well a close partner with broadcom is open AI with chat G GPT the company breaks out its revenues into two primary segments semiconductor Solutions and infrastructure software which as you could see grew 200% year-over-year in the latest quarter over the past 12 months broadcom has generated $19 billion in free cash flow and they're operating with an impressive free cash flow margin of 39. 9% but believe it or not it's down from 49% the prior year looking here at the fast graphs chart we can see that analysts are looking for earnings to grow 28% next year 177% in 2026 growing its earnings at a fast clip still using next year's EPS estimates shares of broadcom are trading at a forward PE multiple of 26.
5 which is well above their 5-year average of 17 times however we can't just compare today's multiple compared to the 5-year average because broadcom has evolved into a much different company than it was 5 years ago in fact we can say that broadcom has evolved even more just looking out over the past 12 months and when we incorporate the growth trajectory over the next few years we can see that we still have a stock trading with a PEG ratio of 1. 2 which is rather intriguing analysts are also upbeat on the stock rating at a strong buy with a 12-month price target of $200 flat implying more than 20% upside from current levels if you've been on the sideline with broadcom it looks like a great entry point right here but for me already owning a sizable position I would be looking to buy back on a dip in a price point right around those mid 150 range is where I would love to add to my share count in broadcom and that leads us to AI stock number three which is going to be Micron Technology we're going from one chipmaker in broadcom to another chipmaker in Micron but they offer different capabilities Micron has a high-powered memory offering used used exclusively by data centers to power all the AI capabilities however the stock has been in a bit of a rough patch since hitting its highs back in summer so when you think about it we have huge growth in Ai and with huge growth in AI comes huge growth in data centers and with huge growth in data centers we also need to look at the old data centers to keep them up to speed all of this impacts in a positive manner the likes of Micron the company currently trades at a market cap of4 billion and over the past 12 months Shares are up 33% we talked earlier about Nvidia being the king especially when we're talking about semiconductors but Nvidia needs a company like Micron in order to further grow their capacity the high bandwidth memory Market has a huge Runway of growth moving forward and with the stock falling from its summer highs and consolidating at current levels now might be a great time to buy over the past few years Micron has been growing their operating cash flow to strong clip but they've also been reinvesting much of that for further growth into the future so free cash flow is only sitting at 120 million looking here at the fast graphs chart we can see that analysts are looking for the company to generate $8. 88 in EPS next year which equates to a forward PE multiple of just 11 and a half times which Compares very favorably to their 5-year average of 27 times there's a lot of excitement but there's also a lot of uncertainty as it pertains to the growth moving forward when it comes to Micron but looking at the valuation that low it seems like a lot of that is already priced in analysts are most bullish on the stock rating at a strong buy with a 12-month price target of $150 implying more than 45% upside from current levels I like these levels we currently have when it comes to shares of Micron before we move on to our fourth AI stock let me tell you about my newsletter the stock investors Edge where premium subscribers get insight looks to keep an edge in the market you get access to my entire portfolio you get trade alerts stock deep Dives on a weekly basis our monthly report on Quick Picks and so much more check out the link for our Black Friday special going on right now and now we can get to our fourth AI stock which is going to be Apple stock ticker AAP some of you might be sitting there right now saying how is Apple an AI play but as we have seen in the latest iPhone models that have been introduced they have also introduced their AI capabilities which are still rolling out slowly so I think it's going to be less about this model iPhone and the AI growth is going to come in the next year's model so although this stock right now looks pretty overpriced in my opinion I believe that there's a lot of runway for growth in what Apple can go as it pertains to iPhone and AI apple is the third largest company by market cap sitting at $3.
5 trillion and over the past 12 months shares have climbed 20% right now there are an estimated 1. 4 billion iPhones around the world so there's a lot of runway for growth and when you look at Apple stock it's really been consolidating for the past few months between the prices of 220 up to 235 valuations are quite high right now especially when we're talking about a company that is virtually seeing singled digigit growth on the top line one of the major reasons we have seen the likes of Warren Buffett and Burkshire completely slash their position here's a look at the year-over-year revenue growth as it pertains to Apple in 2022 revenues grew 7. 8% in 2023 revenues fell 2.
8% and in fiscal 2024 revenues grew 2% flat those are not growth rates that blow you away nor are they growth rates you typically see for a stock trading above 30 times so in no way shape or form is this the play based purely on valuation because those valuations need to come down or those earnings estimates need to come up to make it a little bit more intriguing when it comes to Apple but the growth is there and the capability is there and I believe those estimates could in fact go higher think about the capabilities they have with AI right now which are rolling out on iPhones as we speak they're going to start out as free but what happens when they start charging a small fee again 1. 4 billion iPhones out there just small fee can make a huge inroads to that Revenue growth although the company hasn't been growing as fast they've been finding ways to become more efficient operating margins have increased from 24% in 2020 to 31. 5% today iida margins have grown from 29.
5% in 2020 to 34. 5% today and free cash flow margins are currently sitting at 27. 8% looking here at this fast grph chart we can see that analysts are looking for the company to generate EPS of $77.
40 per share next year which equates to a forward PE multiple of 31. 1 times slightly above their 5-year average of 29 and a half times but also a positive takeaway is the earnings growth you could see returning something that has been gone since those 21 2022 years analysts are not as bullish on this stock over the next 12 months and a lot of that probably has to do with valuation right now but again as I mentioned this is more Beyond 12 months as the next iPhone cycle comes out analysts rate the stock a moderate buy with a 12-month price target of $247 implying nearly 10% upside from current levels so when it comes to Apple definitely not intrigued with today's valuation I would like to look for Apple to come down closer to that $200 per share level which is where I would start nibbling yet again to this position and that leads us to AI stock number five which is going to be alphabet stock ticker goo GL alphabet has actually been in the news quite a lot here lately and not for the reasons they wanted to because the doj has brought suit against them to break out part of their business particularly Google Chrome some describe this as a moonshot but they are looking to break up part of the company although you need to respect this you also have to look at likelihood cuz it could play into valuation this is a doj moonshot with a doj potentially on their way out when we take a closer look here at alphab bet you could see the company is trading with a market cap of $2 trillion and over the past 12 months shares have climbed 19% the stock did recently sell off with that doj news but some investors may be breathing a sigh of relief knowing that President elect Trump is coming into office here in a few short months and although he was critical of Google on the campaign Trail he never pushed for a breakup of Google leaving that doj stuff now behind us and taking a closer look at alphabet the company we can see that this is the company that's been growing their free cash flow at a strong clip and they've been operating very efficiently and as AI becomes a larger larger piece of the pie and they're able to incorporate this into things like Google cloud and Google search it's just going to impact that more and more and get growth moving faster and faster last year the company generated a record $ 69. 5 billion do in free cash flow and they did that while generating free cash flow margins of 21.
7% looking here at this fast graphs chart we can see that analysts are looking for the company to generate EPS of $8. 95 per share next year which equates to a forward PE of just1 18. 4 times the cheapest of the mag 7 stocks and below a market multiple this Compares very favorably to their 5-year average of 25.
7 times analysts are also upbeat on the stock over the next 12 months rating the stock a strong buy with an average 12-month price target of 208 implying 26% upside from current levels this is certainly a cheap stock here especially for the size of the company especially for the growth they're expected to have in the coming years and at that multiple it seems like a lot of those risks might already be priced in and that leads us to AI stock number six which is going to be Amazon stock tier amzn and if you've watched any of my prior videos you know I love Amazon a position that I continue to want to increase and it's very similar to the same reasons on why I liked Microsoft or why I liked alphabet this is a very Diversified company with multiple revenue streams they have AWS they have e-commerce they have advertising subscriptions and the list goes on when one particular area is slow they have multitude of others that can pick it up the company currently trades with a market cap of $2. 1 trillion and over the past 12 months shares of Amazon have climbed 35% thinking of Amazon as an AI play may be weird for some but behind the scenes this is a company that has been investing billions in AI they've been investing in a close competitor to the likes of open AI that project being anthropic Amazon recently infused another 4 billion in funding into anthropic which is the biggest rival to open Ai and so far they have invested $8 billion in total in the project in addition to that AI is looking to step on the toes of Nvidia as well as they've been developing their own AI chips which anthropic will be utilizing as part of the partnership and all of this will utilize AWS Cloud this is a company that by far is my favorite on the list there is huge growth potential talking about AI or even outside of AI when it comes to Amazon and this is a company that just a few years back had negative free cash flow they continued to grow their operating cash flow but they were investing so much money that they were investing more than they were actually generating well that has flipped now and we are off to the races generating more and more in positive free cash flow last year the company generated 32 billion in free cash flow and over the past 12 months the company has generated 43 billion free cash flow margins currently sit at 7% something I expect to surpass 10% very soon looking here at this fast graphs chart we can see that analysts are looking for the company to generate EPS of $616 next year which equates to a forward e multiple of 31. 9 well below their 5-year average of 65 however the average EPS growth rate over the next 2 years is 48.
5% per year meaning the stock currently trades with a PEG ratio of just 0.
