MSFT, PLTR, and NVDA: Daniel Ives Picks the Best AI Stocks to Buy

Yahoo

10-05-2025

AI promises to transform nearly everything about our world, in ways possibly more profound than anything since the Industrial Revolution kicked off in the 1760s. The technology is already automating the mundane tasks of the digital world, speeding up data collection and analysis and making results available at the press of a button. AI-powered language matrices are facilitating communications, not just between people from different countries but between people and machines. With AI-capable interfaces, system operators can enter queries and instructions in natural language, and receive feedback the same way – imagine a digital world where computer coding is obsolete.
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The potential here is astounding, and we've probably only scratched its surface. Watching the tech sector for Wedbush, analyst Daniel Ives outlines the sheer scale of the AI Revolution that's upon us.
'Over the last few years, we have discussed the AI Revolution constantly as in our opinion it represents the biggest tech transformation in over 40 years… With the global AI market expected to reach $407 billion by 2027 and $1.81 trillion by 2030 representing a 36% CAGR, more industries are turning to AI to solve complex problems and optimize business processes by leveraging advanced algorithms, machine learning, and data analysis techniques to gain valuable insights and automate decision-making,' Ives opined.
'With the world generating ~400 terabytes of data every day and 90% of the world's data generated in the last 2 years alone, more organizations are looking to leverage their datasets to power AI initiatives to generate greater operational efficiencies by automating mundane, repetitive tasks,' the analyst added.
Ives follows this by making several recommendations, pointing out the best AI stocks to buy as the sector heats up. In his view, these are the stocks that will let investors cash in. His picks include Microsoft (NASDAQ:MSFT), Palantir (NASDAQ:PLTR), and Nvidia (NASDAQ:NVDA), leaders in software, data analysis, and semiconductors. We've used the TipRanks platform to look up how Wall Street view these choices – let's dive in.
Microsoft
First on our list of Ives' tech picks is Microsoft, currently the highest-valued publicly traded company on Wall Street, with a market cap of $3.22 trillion. Microsoft has built its success on its dominance in the software field; its Windows operating system and Office software packages are industry standards. More recently, Microsoft has been moving into cloud computing and AI, but not as wholly separate fields; the company is using AI to enhance its Azure cloud computing platform, and is using both the cloud and AI to enhance its consumer software products.
One quick example is Copilot, the company's new online AI assistant, which is integrated into the Windows and Office packages. Users can open Copilot without leaving what they are doing and use the AI to answer queries, search the web, correct spelling – the possibilities are nearly endless.
On a larger scale, Microsoft's Azure cloud platform is one of the industry's three big players, competing with Google Cloud and AWS in the subscription-based cloud computing field. Azure is a global player, supported by a worldwide network of more than 300 data centers, and offers subscribers a wide range of tools and services, including an expanding array of AI-based options. In addition to its software options, investors can also use Azure for Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS).
We should note that Microsoft's forays into AI are not new. The company was an early backer of AI technology and became an investor in OpenAI back in 2019. OpenAI is known as the company that set off the current AI boom with the release of ChatGPT; Microsoft's investments in the AI company to date reach almost $14 billion.
Turning to the financial side, we see that in the recently reported fiscal 3Q25, Microsoft had total revenues of $70.06 billion, up 13% year-over-year and $1.62 billion ahead of the pre-release estimates. The firm's bottom line earnings, at $3.46 per share, were 24 cents per share over the forecast. We should note here that Microsoft's Intelligent Cloud, which includes its AI and cloud services, saw revenues of $26.8 billion, up 21% year-over-year and making up 38% of the total.
Wedbush's Ives is bullish here. He sees AI as the story to follow, writing of Microsoft, 'We are laser focused on the AI piece of this MSFT story and all metrics were ahead of expectations which give us added confidence in the AI Revolution bull thesis for Redmond into the rest of FY25 and beyond as MSFT remains in the driver's seat in this AI Revolution with elevated use cases for its tech stack leading to accelerated adoption within its massive enterprise installed base.'
Ives puts an Outperform (i.e., Buy) rating on Microsoft, and his $515 price target indicates room for a 17.5% upside on the one-year horizon. (To watch Ives' track record, click here)
The Street gives Microsoft a Strong Buy consensus rating, based on 35 reviews that include 30 Buys and 5 Holds. The shares are priced at $438.17 and the $506.31 average target price implies that MSFT will gain 15.5% by this time next year. (See MSFT stock forecast)
Palantir Technologies
Next on our list of Ives' picks is Palantir Technologies, an innovator and leader in the field of data analysis software. Palantir is well-known for bringing AI technology to bear on data analysis and management, and has integrated various AI tools into its software packages. The company's flagship product is dubbed the AIP, or AI Platform, and one of its key selling points is its ability to successfully link the strengths of AI technology with human users' intuition to bring about improved outcomes in data analysis. Palantir makes the AIP available to users on a subscription basis.
The company's data tools have proven popular in both the private and public sectors. The company boasts approximately 700 customers, including such key industrial concerns as BP and Stellantis, as well as the US Department of Defense, and the Department of Agriculture. These diverse users are attracted to the efficiencies that Palantir offers in data analysis – particularly in the company's use of natural language processing to speed up the human-machine interaction. Users don't need to know any coding or specialized computer language or inputs to enter queries; rather, instruction and questions can be entered in clear text, and Palantir's platform will return answers the same way. Even better, Palantir's AI can handle translation duties, making the platform truly international.
A couple of examples will show how Palantir's AI-powered service is expanding. In April, the company announced that Anthropic, known for its AI chatbot application dubbed Claude, will be entering a partnership to make Claude available on the Palantir FedStart SaaS platform. Palantir's FedStart offering is designed to give private companies a boost in reaching compliance with Federal requirements. The addition of Anthropic's Claude to the platform will allow users to operate with greater efficiency, using the AI to write content, analyze data, and solve problems.
Earlier this month, Palantir entered into a cooperative agreement with xAI and TWG Global to create new services aimed at increasing the adoption of AI technology among financial service providers at all scales. The partnership will leverage its combined expertise in AI and data management to make an AI-first strategy available in the finance workplace.
Palantir is riding high on its success in making AI tools easy and intuitive for human users. Like Nvidia above, the company has seen its stock price rise dramatically in recent years – but in Palantir's case, the share price gains are even stronger. PLTR stock is up 463% in the past year, and more than 1,497% in the past three years.
The share gains are supported by steadily rising revenues. Palantir reported its 1Q25 results on May 5; in the first quarter, the company's revenue came to more than $883 million, up 39% year-over-year and $21.7 million better than had been forecast. The firm's EPS, reported in non-GAAP figures as 13 cents, was up 5 cents per share year-over-year and met the Street's estimates.
Palantir's clear success in both developing products and generating revenue has made an unabashed fan of Daniel Ives, despite wider fears on Wall Street that the stock is overvalued. Ives writes of PLTR, 'We view Palantir as a generational tech name that we see as a trillion-market cap over the next three years with PLTR being a core name in the AI Revolution theme over the coming years as the company sees significant traction across both enterprise and federal landscapes with its AIP product moat unmatched.'
The Wedbush analyst goes on to put an Outperform (i.e., Buy) rating on this stock. His price target, set at $140, shows his confidence in a 17.5% upside for the coming year.
That's the bullish view. Overall, Palantir's 18 recent analyst reviews support a Hold consensus rating, with a breakdown of 3 Buys, 11 Holds, and 4 Sells. The stock's average price target is $98.56, implying a one-year downside of 17% from the current trading price of $119.15. (See PLTR stock forecast)
Nvidia
The last stock we'll look at, Nvidia, is a giant in all respects. The semiconductor company is a Magnificent 7 stock, one of the mega-cap tech firms that has been at the forefront of the market in recent years, and its $2.85 trillion market cap makes it the third-largest publicly traded company on Wall Street. Nvidia built its reputation on its graphics processor units, the GPU chips originally developed for high-end computer gaming but which proved providential for the company when the AI boom got started.
That was because the GPU chips had the processing power and capacity to run the latest AI applications – and Nvidia, which had developed the first GPUs in 1999, had an automatic step up as a maker and provider of exactly the hardware necessary to make the AI boom possible. The result can be seen in the company's share price – NVDA has appreciated by an astounding 593% over the past three years.
Several recent developments show how Nvidia is staying at the forefront of AI's technological development. First, Nvidia is working with Oracle to integrate Nvidia's accelerated computing (embodied in its latest Blackwell processors) with Oracle's generative AI services – with the goal of speeding up the development of the latest agentic AI applications. In addition, Nvidia is also opening a new research and development center in Boston, to concentrate efforts on quantum computing advances. The R&D center will focus on combining the leading quantum computing hardware with AI-powered supercomputers, to make accelerated quantum supercomputing possible.
And finally, just this month, Nvidia announced that its latest Blackwell chipsets have been tapped by the supercomputer technology provider Cadence for its latest Millennium M2000 Supercomputer. The integration of Nvidia's chips with Cadence's hardware has positive implications in numerous supercomputing fields, including semiconductor design, digital twin simulations, and new drug candidate discovery.
These moves just make up the tip of a much larger iceberg; as with Nvidia's original GPU, designed to boost gaming interfacing, there is no telling what the next chip technology will make possible. For now, we should note that Nvidia's data center business in fiscal 4Q25, which ended on January 26 of this year, came to $35.6 billion, up 93% year-over-year and comprising ~90% of the company's total revenue for the quarter – and the data center business is intimately tied to the AI sector.
Nvidia's total revenue in fiscal 4Q25 came to $39.3 billion, beating the forecast by $1.19 billion. At the bottom line, the company realized a non-GAAP EPS of 89 cents, or 4 cents per share ahead of the estimates. Looking ahead to the fiscal 1Q26 results, slated for release later this month, Nvidia is expected to have revenues at or near $43 billion and adj. EPS of $0.89
For Daniel Ives and the Wedbush team, Nvidia's greatest strength is its long head start and consequent lead in the GPU field, which in turn is opening up new doors for the company: 'Nvidia remains the undisputed leading supplier of GPUs into numerous high growth markets, including gaming and data center applications. The company has also built a strong position in the emerging market for autonomous driving solutions, which should yield benefits once this technology becomes mainstream. We view Nvidia's intermediate term growth profile as likely to parallel broader favorable consumption/investment trends in these industries, bolstered by ramping Blackwell projects and large private and sovereign AI investments.'
Nvidia (covered by Ives' colleague, 5-star analyst Matt Bryson), receives an Outperform (i.e., Buy) rating from Wedbush, backed by a $175 price target that implies a one-year upside potential of 49%. (To watch Bryson's track record, click here)
The 40 recent analyst reviews on file for Nvidia break down to 34 Buys, 5 Holds, and 1 Sell, for a Strong Buy consensus rating. The shares are currently trading for $117.37 and the average price target, at $164.35, suggests a gain of 40% in the next 12 months. (See NVDA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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