Artificial intelligence (AI) bulls were caught off guard in January when Chinese startup DeepSeek launched a free AI assistant that quickly disrupted the market. The model showcased logic and reasoning capabilities comparable to ChatGPT but was developed at a fraction of the cost.
Shortly after its debut, DeepSeek overtook OpenAI’s ChatGPT as the top app on Apple’s App Store, sparking concerns about OpenAI’s dominance. Its unexpected rise came on the heels of a high-profile announcement by President Trump, outlining a $500 billion dollar joint venture between OpenAI, SoftBank, Oracle (ORCL), and MGX, to bolster U.S. AI infrastructure and promote American leadership in the sector. It remains to be seen how the AI race will play out, but 2025 is shaping up to be a pivotal year for groundbreaking developments.
Below is an analysis of the top AI stocks for February 2025, screened for best value, fastest growth, and most momentum.
All stocks are listed on the Nasdaq or New York Stock Exchange.
All data are current as of Feb 3, 2025.
Best-Value AI Stocks
Value investing is about finding stocks trading below their true worth, with the expectation that the market will eventually correct the mispricing and the stock price will rise. Investors often use price-to-earnings (P/E) ratio to find stocks that are undervalued, as a lower P/E ratio can indicate that a company is valued at less than its fundamental value.
However, it may take multiple quarters or years before a turnaround materializes. Some stocks may also remain cheap for a reason, falling into a “value trap,” continuing to underperform despite appearing undervalued. Moreover, the P/E ratio should not be viewed in isolation. Investors should ask why a stock is trading at a discount to its peers and whether that gap is likely to close due to a business recovery, or the market recognizing the value opportunity.
| Best-Value AI Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization ($B) | 12-Month Trailing P/E Ratio | |
| Yiren Digital Ltd. (YRD) | 5.51 | 0.50 | 1.9 |
| i3 Verticals, Inc. (IIIV) | 24.97 | 0.84 | 5.3 |
| Perion Network Ltd (PERI) | 9.22 | 0.44 | 9.9 |
- Yiren Digital Ltd.: A fintech company based in China, Yiren Digital operates a financial marketplace connecting investors with borrowers. It offers payment processing, loan services, insurance products, and ecommerce products. Overall, the company continues to ramp up its AI initiatives, deploying new technologies to increase operational efficiency. To reinforce the AI narrative, Yiren recently joined the China Artificial Intelligence Industry Alliance (AIIA), signaling its commitment to innovation.
- I3 Verticals, Inc.: i3 Verticals specializes in developing and acquiring software solutions for the public sector and health care markets. I3 has leveraged AI in multiple use cases, such as increasing customer engagement for its utility partners.
- Perion Network Ltd.: Perion is a global digital advertising company based in Israel. It leverages AI to enhance ad campaigns through its proprietary solutions, SORT and WAVE. SORT enables AI-driven targeting using real-time signals, while WAVE employs generative AI to create dynamic audio ads that adapt to context, behavior, and demographics.
Fastest-Growing AI Stocks
Growth investors look for companies with increasing revenue and earnings per share (EPS), believing these metrics signal strong business fundamentals and potential for value appreciation. However, relying on just one of these indicators can present an incomplete picture, as factors like tax law changes, mergers, or one-time gains can distort the numbers.
For a more balanced assessment, we screen AI growth stocks by looking at the most recent year-over-year percentage growth for both revenue and EPS, giving each equal weighting. We also excluded companies with growth rates in either category of 1,000% or more on the grounds that these are likely outliers.
| Fastest-Growing AI Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Sportradar Group AG (SRAD) | 20.78 | 6.2 | 795 | 28 |
| Duolingo, Inc. (DUOL) | 364.44 | 16 | 714 | 40 |
| ODDITY Tech Ltd (ODD) | 47.43 | 2.7 | 323 | 26 |
- Sportradar Group AG.: Sportradar Group AG is a global sports technology company that provides data analytics, betting solutions, and media services to sports organizations, media outlets, and sportsbooks. Its core businesses include real-time sports data collection, AI-driven betting and gaming solutions, fan engagement tools, and integrity services that monitor and prevent match-fixing.
- Duolingo, Inc.: Duolingo is the world’s leading mobile learning platform, with over 113 million active monthly users learning new languages around the world. With technology at the core of its business, the company announced major AI-powered innovations at Duocon 2024 in September, including Video Call, which enables real-time language practice with an AI character.
- ODDITY Tech Ltd: ODDITY is a consumer tech company leveraging AI and data science to create digital-first beauty and wellness brands, disrupting traditional offline markets. The company currently boasts 50 million users and recently announced the acquisition of the intellectual property and research team of AI fintech, Fionic.
AI Stocks With the Most Momentum
Momentum investing is a strategy that seeks to capitalize on existing market trends by investing in stocks that have recently outperformed their peers or the broader market. The core idea is that stocks on an upward trajectory are likely to continue rising as long as the fundamental drivers
behind their growth remain intact.
The momentum strategy has become synonymous with AI, owing to the fast growth of this sector. AI names can generate returns that far outpace established tech names, driven mostly by investor sentiment. While it’s a viable strategy for those with a higher risk tolerance, investors should also focus on the company’s underlying financials to ensure the anticipated growth prospects will materialize.
Here are the AI stocks with the highest total return in the last 12 months.
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Quantum Computing, Inc. (QUBT) | 9.95 | 1.4 | 1176 |
| SoundHound AI, Inc. (SOUN) | 14.24 | 5.6 | 743 |
| Palantir Technologies, Inc. (PLTR) | 83.74 | 191 | 412 |
- Quantum Computing, Inc.: Quantum Computing is an integrated photonics and quantum technology company focused on developing accessible and affordable quantum computing solutions. While there is controversy around the commercial viability of quantum computers, the company has secured significant partnerships, including with NASA for applications in space missions.
- SoundHound AI, Inc. SoundHound’s proprietary technology offers fast, accurate voice recognition across various industries, including automotive, TV, Internet of Things (IoT), and customer service. Recently SoundHound announced a partnership with Rekor Systems to integrate voice-controlled AI with advanced vehicle recognition technology in police and emergency vehicles. This feature will allow police officers to receive real-time vehicle alerts and control critical in-car systems hands-free.
- Palantir Technologies, Inc.: Palantir provides advanced software platforms for data integration, analytics, and decision-making, for both government and commercial sectors. In December, Palantir Technologies extended its partnership with the U.S. Army in a $619 million agreement to enhance the Army Data Platform (ADP) with AI-driven data solutions for improved decision-making and operational efficiency.
Advantages of AI Stocks
Mass Disruption
AI is a rapidly evolving sector with applications across nearly every industry, from health care to finance and cybersecurity. As adoption accelerates, AI companies have significant room for revenue expansion and market dominance. Furthermore, ongoing advancements in research and development are enhancing AI models’ reasoning and adaptability, unlocking even greater disruptive potential.
Innovation
AI-driven automation enhances efficiency, leading to reduced costs for businesses. Companies leading in AI development can secure long-term competitive advantages, making them attractive investments in both the short and long term.
Investor Enthusiasm
AI stocks often experience strong investor enthusiasm, driving rapid price appreciation. With ongoing advancements in machine learning, automation, and generative AI, market sentiment remains highly bullish, fueling momentum-driven gains.
Disadvantages of AI Stocks
High Valuations and Market Speculation
Many AI stocks trade at high valuations due to investor enthusiasm and growth expectations. While the AI sector has strong long-term potential, some companies may be overvalued, leading to the risk of significant price corrections. Speculative investments, particularly in early-stage AI companies, can result in inflated valuations that may not be supported by actual revenue or profitability.
Regulatory Risks
AI technology is increasingly facing scrutiny from governments and regulatory bodies worldwide. Concerns over data privacy, algorithmic bias, job displacement, and national security risks could lead to stricter regulations that impact operations and growth prospects. The legal landscape around AI is still in its early stages, and new laws around transparency, intellectual property rights, and ethical AI development are being fleshed out.
Stiff Competition
The AI industry is highly competitive, with major players such as Alphabet (GOOGL), Microsoft (MSFT), Nvidia (NVDA), and OpenAI continuously advancing their technologies. This rapid pace of innovation means that companies that fail to stay ahead may become obsolete. Additionally, emerging AI startups such as DeepSeek can disrupt established players seemingly overnight, making it difficult for investors to predict long-term trends.
The Bottom Line
AI stocks offer significant growth potential, fueled by rapid technological advancements and strong investor enthusiasm. However, high valuations, regulatory uncertainties, and intense competition pose risks that investors must carefully navigate. While AI remains a compelling long-term investment, careful scrutiny of a company’s financials and thorough risk management are essential to avoid speculative bubbles and hype.
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As of the date this article was written, the author does not own any of the above securities.
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