2 Top Stocks That Could Dominate the Rest of 2025

Globe and Mail

2 days ago

Key Points
Nvidia's long-term growth opportunity might be bigger than anyone can imagine.
Wall Street continues to underestimate Google's AI technology and competitive position in search.
10 stocks we like better than Nvidia ›
The markets are still reaching new highs in the middle of the year. The Nasdaq Composite is currently up 9.1% year to date at the time of writing.
In the aftermath of the market sell-off earlier this year, two top tech stocks asserted their dominance in the second quarter. Since April 1, Nvidia (NASDAQ: NVDA) shares are up 57%, while shares of Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) are up 22%. Here's why these stocks could outperform for the rest of 2025 and remain rewarding investments for the long term.
1. Nvidia
Nvidia is providing mission-critical technology to power the revolution in artificial intelligence (AI). It focuses on developing graphics processing units (GPUs), which were originally designed for graphics-intensive software like video games, and are now being used by the most powerful supercomputers. The company's market cap is now over $4 trillion, making it the most valuable company in the world.
Nvidia controls around 90% of the data center GPU market. Its hardware is found in all the leading data centers and used by leading AI researchers like OpenAI, and these customers continue to pour billions into new chips.
Last year, revenue doubled to $131 billion, and the current Wall Street consensus forecast has that reaching $200 billion this year.
All signs point to Nvidia's revenue continuing to grow into the hundreds of billions of dollars over the next several years, as the company's addressable market continues to expand. For example, nations around the world are building their own sovereign AI infrastructure to be less dependent on foreign AI models that weren't trained on their own languages and cultures. Nvidia CEO Jensen Huang says this is a $1.5 trillion opportunity.
Because there's no substitute for Nvidia's ultrapowerful GPUs, the company stands to generate substantial wealth for long-term investors. On top of the sovereign AI opportunity, Nvidia also should benefit from growth in robotics and autonomous vehicles. Huang sees the potential for robots to be the next multitrillion-dollar industry.
If you didn't buy shares during the stock's recent dip, you shouldn't feel you missed out. It's still trading at a reasonable forward earnings multiple of 40; this is within its trading range over the last three years. Long-term, the stock still offers substantial upside as it capitalizes on the global investment pouring into AI from every industry.
2. Alphabet (Google)
Alphabet has a strong competitive moat based on billions of people who use Gmail, YouTube, Search, and its other services every day. The company reported another stellar earnings report for the second quarter, beating expectations, and showing why it's a leading AI company to bet on for the long term.
The large number of people who use Google services continued to fuel strong growth in advertising revenue in the second quarter. Alphabet said total revenue grew 14% year over year, with net income surging 19%, and earnings per share up 22%.
Solid growth in Google Search revenue eased fears that competing AI models from xAI and OpenAI are hurting Google's core business. Search revenue hit a record $54 billion, up 12% year over year. This growth indicates healthy advertising demand, as users engage with Google's AI Overviews feature, which puts a convenient summary at the top of a search query.
Another key indicator of Google's competitive position is strong growth in the cloud business. Google Cloud has been gaining share in a $348 billion cloud market, according to Synergy Research. Revenue hit $13.6 billion in Q2, up 32% year over year. Google Cloud continues to show impressive margin improvements, with operating income increasing from $1.2 billion in Q2 2024 to $2.8 billion in the recent quarter.
These results indicate that Alphabet stock is undervalued. Despite prospects for double-digit earnings growth in the coming years, you can buy the stock at a forward P/E of just 20, which looks like a steal for this Magnificent Seven company. The stock seems in the process of being revalued by the market and might be trading at a higher P/E entering 2026, so it may outperform market averages.
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