AI Stocks in 2025: Hype, Value or Bubble?
Curious whether AI stocks in 2025 are still worth the hype? Let’s break down performance trends, top picks, and practical tips for investors looking to make informed decisions.
How Are AI Stocks Performing In 2025?
AI stocks are delivering real gains in 2025, but they’re walking a tightrope between innovation and overvaluation. The fundamentals support the rally, with enterprise adoption accelerating, data center demand booming, and AI clearly reshaping the economy.
But let’s be clear: these stocks are still priced for perfection. Hype fuels momentum, but over time, valuation often catches up with reality. Long-term returns won’t just depend on how powerful the tech is, but crucially, how much investors overpaid to chase it.
Top Indirectly AI-linked Stocks
These ride the AI wave through software services, cloud infrastructure, analytics, or other tools, and deliver growth without pure-play valuations:
- Microsoft (MSFT) – A classic “FAANG” indirect AI play: cloud + enterprise AI.
- Adobe (ADBE) – Goldman Sachs puts it among what it calls the top “Phase 3” – AI monetizers – firms generating revenue through AI, not just as speculative future promises – that are currently undervalued.
- IBM – Valuation has improved in 2025 thanks to a strategic focus on hybrid cloud and AI services.
- CoreWeave (CRWV) – A GPU-cloud infrastructure provider powering AI workloads; recently went public. Owns massive Nvidia-powered data centers and contracts with OpenAI and Microsoft.
Tips For Investors Eyeing AI Stocks
“Shovel Sellers” May Be Better than “Gold Miners”
If you think of the analogy of AI investment like the 19th‑century Gold Rush, it’s often safer to be the “shovel seller” than the gold miner itself. Shovel providers (e.g., data‑center infrastructure, chipmakers, cloud networks) benefit from broad, recurring demand and avoid the upstream risks tied to specific AI breakthroughs or model hype.
For example, not all that long ago, much of the focus was on which company/companies can come up with the best chat model. Now improvements are flatlining, the technology is becoming commoditized, increasingly cheaper to develop/copy, and broadly accessible for free.
As a result, expectations are shifting away from raw model performance and more toward differentiated, value-added products that solve specific problems or integrate seamlessly into workflows. For example, agentic computer-use features are one of the newer trends in AI and are currently slow, error-prone, and limited as of June 2025, but are likely to be a fairly commoditized component in modern computing in 2-3 years.
So when considering indirect AI plays, consider “shovel” companies (those supporting the AI ecosystem) for steadier revenue and lower execution risk compared to pure “gold miners” chasing the volatile frontline of AI innovation, especially those with very high valuations and with questions about being able to control their cost structures.
Utility Doesn’t Guarantee Profitability + Not All Innovation is Necessarily a Great Investment
A technology may be groundbreaking and widely useful, but it doesn’t necessarily mean it translates into large profits or makes a good investment by itself.
If we take the airline industry as an example, commercial air travel is one of the truly great engineering achievements of the modern world, shrinking continents and transforming global commerce. Yet the industry as a whole has historically generated close to zero net shareholder returns over its ~100-year history.
It’s also important for AI investors to consider the second-/nth-order effects of the technology. Using our air travel example, industries like tourism, hospitality, global logistics, aerospace manufacturing, and international business services have reaped greater economic gains from air travel than the airline industry itself.
ROI by Using Technologies Directly
Instead of focusing solely on AI stocks, consider how emerging technologies can improve your own workflows, decision-making, and daily productivity.
Often, the greatest ROI comes not from investing in the companies themselves, but from knowing/applying the tools and up-skilling to gain leverage in your own work and life.