The market has been staging a major comeback since an Iran war ceasefire was announced last week. The S&P 500 has rebounded and is roughly flat year to date as of this writing, driven by lower oil prices and relief about what that means for the economy.
Artificial intelligence (AI) stocks make up a large portion of the weighted index, and higher stock prices in the space are driving in its recovery. Oil is used for multiple purposes and impacts many industries. For AI, that shows up in the energy that powers data centers, in addition to the way energy costs generally affect commerce and inflation.
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As AI stocks rise, Alphabet (NASDAQ: GOOG), Nvidia (NASDAQ: NVDA), and Amazon (NASDAQ: AMZN) are three excellent stocks to pick up.
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Alphabet, parent company of Google, has become an AI star, and its ability to take on what was a big threat and turn it into an advantage speaks to its durability and strength. When ChatGPT first emerged about three years ago, it presented an alternative to the standard search engine, which is Alphabet’s bread and butter: Google controls about 90% of search traffic. But the company has developed its own, competing large language model, Gemini, which has become hugely popular, with 750 million monthly active users. It also offers AI mode on its regular Google searches, and Google is now a fully AI-powered search engine.
Gemini contributes to Alphabet’s business in several other important ways. It has resulted in an improved advertising business, since advertisers can tap the power of AI to create precise marketing campaigns with a robust and accurate set of analytics.
And it offers opportunities for the company’s cloud clients to engage with and develop their own AI apps using Gemini and other AI platforms. The cloud business has been on fire, with sales increasing 48% year over year in the 2025 fourth quarter. Customers are hungry for AI products, and the cloud backlog rose 55% in the fourth quarter to $240 billion.
As AI explodes, Alphabet has a place at the table. But because it’s so much more than AI, it’s a solid bet for long-term value.
Nvidia is the poster child for AI, but it has failed to impress the market recently. Investors have been worried that hyperscalers are overspending and may never recoup their investments, and if spending slows down, Nvidia will be highly impacted.
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However, management remains confident that spending will continue and a windfall is coming. CEO Jensen Huang recently assessed that there’s a $1 trillion opportunity through 2027, and sales growth has been accelerating. The market is finally starting to believe that Nvidia, even as the most valuable company in the world today, still has a long growth runway.
It releases new products at a pace that’s hard to keep up with, and it recently launched its latest platform, the Vera Rubin line. Rubin chips are faster and cheaper than the previous Blackwell line, and Nvidia says it has commitments in place extending into 2027.
Nvidia stock is still about 11% off its highs, and now could be a great time to buy shares before it soars again.
Amazon is the largest cloud provider in the world, accounting for about a third of the market. That gives it an edge in AI development, since it has the greatest exposure and opportunity. That’s why it’s making the biggest AI investments of all of the hyperscalers, expecting to spend $200 billion in 2026 alone. As incredible as that sounds, CEO Andy Jassy said that the company is “monetizing capacity as fast as we can install it.”
Amazon Web Services (AWS), the cloud business, grew 24% year over year in the fourth quarter, the highest rate in 13 quarters. That’s over a huge base of $35.6 billion, or a $142 billion run rate. The AI business is mostly on AWS, where Amazon offers AI development services to its huge base of cloud clients, which continues to grow quarterly, including new and expanded deals with high-profile names such as Visa, Lyft, and the U.S. Air Force in the fourth quarter.
It also has its own chip business that competes with Nvidia on price, and this business is growing at triple digits, reaching a $10 billion run rate in the fourth quarter.
Amazon stock is rebounding with the market, which may have been underestimating its long-term opportunity, but you can still buy into its growth story.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Lyft, Nvidia, and Visa. The Motley Fool has a disclosure policy.
Artifical Intelligence (AI) Stocks Are Rising on the News of an Iran War Ceasefire. Here Are 3 Great Ones to Pick Up Now. was originally published by The Motley Fool
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