These top tech stocks could benefit from higher AI spending this year.
Leading tech companies continue to report insatiable demand for artificial intelligence (AI). This is driving tremendous investment in chips, data centers, and cloud platforms. The AI market is projected to grow at a 37% annualized rate through 2031, reaching $1.7 trillion, according to Statista.
Two stocks that are obvious buys based on the demand they are seeing are Advanced Micro Devices (AMD 2.62%) and Google parent company Alphabet (GOOG +1.85%) (GOOGL +1.91%). These stocks still trade at reasonable valuations relative to growth expectations.
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1. Advanced Micro Devices
AMD’s data center chips are in high demand. While it plays second fiddle to Nvidia, the company reported record sales of its EPYC central processing units (CPUs) in the third quarter, driven by strong demand from major hyperscalers like Google, Microsoft, and Alibaba.
The company is also attracting strong interest for its next-generation data center chips and Helios AI computing system. The biggest validation yet of AMD’s technology came in two deals signed last year with OpenAI and Oracle. These companies will be deploying AMD’s new MI450 graphics processing units (GPUs), while Oracle will also use AMD’s Helios rack system to power its AI workloads.
Today’s Change
(-2.62%) $-6.79
Current Price
$252.89
Key Data Points
Market Cap
$423B
Day’s Range
$250.31 – $258.20
52wk Range
$76.48 – $267.08
Volume
853K
Avg Vol
41M
Gross Margin
44.33%
Management noted during the Q3 earnings call that its latest products are progressing rapidly in development. Its accelerating data center revenue shows that it is executing well on ramping production and meeting demand in a fast-growing AI market.
The company’s customer wins, along with new products rolling out this year, make AMD stock a compelling investment. The stock’s forward price-to-earnings multiple of 38 is attractive relative to long-term earnings growth estimates of 45%.
2. Alphabet (Google)
Alphabet’s Google is showing great potential to monetize its AI through cloud services. Google Cloud is experiencing strong demand, as it signs larger deals with major enterprises. The demand is driving robust revenue and profitability, which could benefit the stock.
Today’s Change
(1.91%) $6.27
Current Price
$334.20
Key Data Points
Market Cap
$4.0T
Day’s Range
$326.95 – $335.84
52wk Range
$140.53 – $340.49
Volume
446K
Avg Vol
36M
Gross Margin
59.18%
Dividend Yield
0.25%
While Google Cloud accounts for a relatively small part of Alphabet’s business, it is expanding rapidly. Revenue from products built with its AI models grew 200% year over year. This helped drive a 34% year-over-year increase in segment revenue, which is now generating an annual run rate of over $60 billion. This represents a growing share of a $390 billion cloud market.
Google is spending aggressively on infrastructure to drive this growth and meet demand, to the tune of $77 billion and climbing over the trailing 12 months. But these expenditures appear to have a big payoff over time. Google Cloud’s operating profit has been growing rapidly over the past year, and jumped 85% year over year in the third quarter.
Even after a strong rally toward the end of 2025, investors can still buy Google stock at 29 times 2026 earnings estimates. This is still reasonable for an established tech giant expected to grow earnings at a 15% annualized rate in the long term.
John Ballard has positions in Advanced Micro Devices and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Microsoft, Nvidia, and Oracle. The Motley Fool recommends Alibaba Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.