The market has shown a notable rebound following last week’s ceasefire announcement in Iran. The S&P 500 index is currently flat since the year began, buoyed by declining oil prices and sentiments regarding economic implications.
AI stocks play a crucial role in this index’s performance, as gains in this sector are largely driving the recovery. Oil impacts numerous industries, and in the case of AI, the energy costs are significant—not just generally for business and inflation, but also in powering data centers.
Will AI make a millionaire? A recent report highlighted an under-the-radar company termed an “essential monopoly,” supplying key technology essential for firms like Nvidia and Intel.
As AI stocks continue to surge, three big players worth mentioning are Alphabet, Nvidia, and Amazon.
Alphabet, Google’s parent company, has become a leader in AI. Its capacity to adapt a potential threat into a strategic advantage demonstrates its resilience. When ChatGPT emerged about three years ago, it presented a real challenge to Google’s dominance in search, which captures around 90% of global traffic. However, Google is now competitive with its language model, Gemini, which boasts 750 million active users each month. Plus, Google Search itself is integrating AI features, transforming it into a fully AI-driven platform.
Gemini also enhances Alphabet’s advertising business, allowing for more targeted and effective marketing campaigns through sophisticated analytics.
Furthermore, it’s creating avenues for cloud clients to develop their AI applications using Gemini and associated platforms. The cloud segment is thriving, with a remarkable 48% year-on-year sales growth recorded in Q4 2025. The demand for AI solutions is palpable, as evidenced by a 55% increase in cloud backlog to $240 billion in the same period.
Alphabet’s role in the burgeoning AI field is significant. However, it’s crucial to recognize that the company offers much more than just AI—it remains a sound long-term investment.
Nvidia is often seen as the flagship of AI, yet it hasn’t been the standout recently. Investors are wary about potential overspending by hyperscalers, which could hinder financial returns for Nvidia if such spending slows.
Nonetheless, management expresses confidence about ongoing expenditures, pointing to a massive $1 trillion opportunity by 2027. CEO Jensen Huang posits that revenue growth is on an upward trend. The market is beginning to recognize that, despite Nvidia being the world’s most valuable company currently, there’s still room for continued expansion.
The company frequently introduces new products, recently unveiling the Vera Rubin series, which offers better performance and cost efficiency than its predecessors. Nvidia asserts a contract extending through 2027.
Despite a current 11% drop from its peak, it could be an opportune moment to invest in Nvidia stock before potentially soaring prices.
Amazon stands as the largest cloud provider globally, holding about one-third of the market share. This positioning offers considerable advantages for AI advancements, leading the company to plan a whopping $200 billion investment in AI by 2026. CEO Andy Jassy noted that Amazon is rapidly monetizing its capacity as it becomes available.
Amazon Web Services (AWS), the cloud division, recorded a 24% growth year-on-year in Q4—the fastest rate in over three years. That translates to a substantial base of $35.6 billion—projecting over $142 billion moving forward. The AI segment greatly relies on AWS, facilitating AI development for an expansive array of cloud clients. AWS keeps expanding, landing new deals with significant companies like Visa, Lyft, and the US Air Force.
Additionally, Amazon has its own chip division that competes with Nvidia on pricing and is experiencing rapid growth, reporting an annual run rate of $10 billion.
Amazon’s stock has recovered, suggesting the market may be underestimating its future potential. Still, the company’s growth trajectory looks promising.
Before considering an investment in Alphabet stock, it’s worth reflecting on a few points.
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Jennifer Saibil holds no positions in any of the stocks referenced. The Motley Fool has shares in and recommends Alphabet, Amazon, Lyft, Nvidia, and Visa.
AI stocks are climbing in light of the ceasefire in Iran. Here are three notable picks.
