Owing to a stronger-than-expected jobs report for December, at 256,000 job gains vs 160,000 expected, the Fed’s interest cuts are no longer a certainty for 2025. Likewise, if inflation is reheating, this would further make the case for the central bank to halt loosening financial conditions.
Otherwise, cheaper borrowing would spur more consumer and business spending, adding to inflation. For December, the latest consumer price index (CPI) data shows a slight decline, at the core 3.2% annual rate reported vs the 3.3% forecast. Nonetheless, this is a 0.2% monthly inflation increase, which is still far from the Fed’s 2% target.
Consequently, before the FOMC meeting in two weeks on January 28/29th, fed fund futures show high probabilities, above 60%, for only two rate cuts in 2025. In addition to the looming threat of global AI/GPU export restrictions, this could damper companies’ capex plans. AI stocks could have fewer gains than in 2023 and 2024.
But with these factors in mind, which AI stocks are worth holding for the long haul (outside the obvious Nvidia)?
Micron Technology (NASDAQ: MU)
Although not an AI company per se, no computing endeavor could exist without high-bandwidth memory. Micron is not only one of the top three memory suppliers, alongside Korean Samsung and SK Hynix, but also the memory supplier in Nvidia’s latest RTX 50 series unveiled at CES 2025.
This was the main reason why MU stock went up 18% year-to-date. Currently priced at $103.21, MU shares are still far from the all-time high of $153.14 in June 2024. Yet, exposure to an AI-supporting company like Micron is a safer bet, given that it is not beholden to new chip export restrictions.
As semiconductor companies reshape their plans, Micron could fill in the gaps as demand for chips not restricted by export controls is increased. As a US company, Micron could also benefit from reshoring and friend-shoring if the Trump admin follows through on domestic industry revitalization.
In December, Micron reported $1.79 per share (EPS), exceeding the $1.60 EPS forecast. The company’s revenue of $8.71 billion increased 84% year-over-year, leaving it with a net income of $1.87 billion and operating cash flow of $3.24 billion.
This is all the more impressive as Micron’s capital expenditures (capex) amounted to $3.13 billion. In the latest investor presentation, Micron also noted that its HBM (high-bandwidth memory) sold out for calendar 2025, as cutting-edge HBM4E is heading to “introduce a paradigm shift in the memory business.”
Although JPMorgan Chase lowered the MU price target from $180 to $145, this still represents solid gains vs the current price of $103.21 per share. Per WSJ forecasting data, the average MU price target is $131.37, with a high ceiling estimate of $250 per share.
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Amazon.com (NASDAQ: AMZN)
Although perceived mainly as an e-commerce/logistics company, this only scratches the surface. Alongside Google Cloud and Microsoft’s Azure, Amazon Web Services (AWS) is one of the top cloud infrastructures for AI workloads. Therefore, Amazon is the intermediary layer for businesses as it provides Nvidia’s AI/GPU chips at scale.
On the AWS platform, the company provides a streamlined suite of AI services, with SageMaker being the centerpiece that unifies data analytics with AI and machine learning (ML). As of November, AWS holds the leading 31% market share in cloud infrastructure, according to Synergy Research Group, which is far ahead of the nextrunner Azure at 20% and Google at 11%.
In addition to AWS dominance, AMZN investors can count on the company to keep taking advantage of brick-and-mortar retail vulnerabilities, such as rampant shoplifting. Amazon’s discounted cash flow (DCF) valuation is presently at $235.96 against the current AMZN stock price of $227.28 per share.
The average AWS price target is $248.04, making it a good option for value investors in the long run, despite Amazon’s recognition as the top dog in the stock world.
Qualcomm Inc. (NASDAQ: QCOM)
QCOM stock price returned to the early 2024 price range, at $164.22 per share, after leaving the all-time high of $224.73 in June 2024, just like Micron. Over the last three months, QCOM stock is down 7%, owing to the poor sales of Microsoft-pushed Snapdragon X Series PC. In the first quarter of shipments, these laptops achieved less than 1.5% of the market share.
However, in the latest Q4 2024 earnings, Qualcomm reported a 9% revenue increase for the full year 2024 to $38.96 billion and a net income increase of 40% to $10.14 billion. Qualcomm CDMA Technologies (QCT) remains the company’s dominant segment in the automotive sector, IoT devices and mobile phones owing to the system-on-chip (SoC) solutions.
As of Q4 2023, Qualcomm held 23% of global SoC shipments, ahead of Apple’s 20% but trailing behind MediaTek’s 36% market share.
The company’s sales of mobile chipsets increased by 12%, while automotive solutions increased by 68% compared to the year-ago quarter. Featured in flagship smartphones from OPPO, Xiaomi, and OnePlus, Qualcomm’s Snapdragon 8 Elite is highly performant, even outperforming iPhone 16’s A18 Pro chip in multicore applications.
Likewise, Qualcomm’s new Snapdragon chips significantly improved its neural engine for AI tasks, clocking 45% faster performance than the previous series. Based on these results, it is safe to say that Qualcomm will continue to power the world’s mobile/AI computing needs, regardless of lackluster sales results for Snapdragon X laptops/tablets.
Per WSJ forecasting data, the average QCOM price target is significantly above the current price of $164.22, at $200.86 per share, making this a great entry point for AI exposure in smartphone form.
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Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.
