In this article, we will discuss the 5 Best AI Stock Picks of Motley Fool Asset Management. Please visit the 10 Best AI Stock Picks of Motley Fool Asset Management, if you would like to see the extended list and the methodology behind it.
5. Amazon.com Inc. (NASDAQ:AMZN)
Motley Fool Asset Management’s Stake: $113.64 Million
AMZN shares are up 45% over the past one year. But does the stock have more room to run?
Cloud remains the biggest long-term catalyst for Amazon. It has a roughly 30–32% share of the global cloud infrastructure market, ahead of Microsoft and Google. The Cloud business generates operating margins estimated at around 30%, significantly higher than traditional retail margins.
As companies deploy AI applications at scale, they need reliable Cloud solutions, and that’s where Amazon can benefit. How? AWS has a strong moat because of the reliability and scalability it provides to large corporations. It benefits from high switching costs and long-term contracts, as migrating enterprise systems can cost millions and take years, helping maintain stable recurring revenue.
AWS ecosystem of services is another strong business moat. Unlike Microsoft Azure and Google Cloud, AWS offers 240+ cloud services, allowing companies to build, train and deploy AI models, store data, run applications and manage cybersecurity within one platform, increasing switching costs and strengthening customer lock-in over time.
E-commerce and ads are strong growth fundamental catalysts for the stock. Amazon.com Inc (NASDAQ:AMZN) controls roughly 40% of U.S. e-commerce, which gives the company access to consumer purchase data. This creates a goldmine for advertisers to target users, and Amazon.com Inc (NASDAQ:AMZN) is tapping into that opportunity. Amazon’s ad segment has been growing around 20% annually in recent years and already generates tens of billions in yearly revenue, making it one of the largest digital advertising platforms behind Google and Meta.
TCW Relative Value Large Cap Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its fourth quarter 2025 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a $2.3 trillion internet company headquartered in Seattle, WA. Amazon.com is an online retailer that also offers personalized shopping services, web-based credit card payment, and direct shipping to customers. AMZN is the largest e-commerce platform in the US with a ~40% market share. Amazon’s secret sauce is their logistics infrastructure that allows for superior delivery times and lower costs than peers, which they use to delight their loyal Prime membership base. Amazon also operates a cloud platform offering services globally through Amazon Web Services (AWS), a fantastic second business with growth opportunities in cloud migrations and AI workloads. Advertising is increasingly important to the overall business with nearly $70 billion of annualized revenues, driven by Sponsored Listings as well as Fire TV/Prime Video ad inventory (e.g., during Thursday NFL games). At initiation in October 2025, shares of AMZN met two of the five valuation factors (price-to-sales; price to-cash flow).
The investment catalyst is new products/markets. AWS has been less impacted by the wave of AI spending than its hyperscale peers as they have top heavy clients that are particularly driving growth (i.e., OpenAI for MSFT† Azure). However, it is set to close the gap as corporates and start-ups begin to scale their inference workloads as they introduce AI-powered products. Additionally, AWS is supply constrained but is set to get significantly more capacity in the next 6-12 months, both from third party providers like NVDA as well as their own custom-designed silicon (Trainium 2). On the retail side, the company is demonstrating operational excellence with consistent improvements in its cost to serve. We expect this to continue and receive a mix benefit as advertising continues to grow as a percent of its North America and International segments. As Amazon leadership execute these strategic initiatives, the company can grow cash flow and earnings materially over the medium term.”
4. Microsoft Corp. (NASDAQ:MSFT)
Motley Fool Asset Management’s Stake: $130.38 Million
Microsoft Corp. (NASDAQ:MSFT) shares are down 10% so far this year amid concerns that AI tools like Claude Cowork could crush the company’s products. The company’s CEO Satya Nadella has reportedly issued a code red at the company to spur growth for Copilot. BNP Paribas recently said these efforts, including Agent Mode, Copilot Cowork, Critique, Council, and Agent 365, could improve the product. The firm said in its note that it believes Microsoft Corp. (NASDAQ:MSFT) can still beat consensus Azure expectations over the coming quarters, even if 50% of new capacity is allocated internally. See more details of BNP’s call here.
Microsoft Corp. (NASDAQ:MSFT) bulls believe the company is protected from the AI threats to SaaS business models. They think the company can shift from a per-seat pricing model to a per-workload model, while its huge base of 450 million commercial users gives it an ecosystem to thrive upon. Over 3.7 million businesses rely on its software, while nearly 486,000 organizations run on Azure, including 85% of the Fortune 500.
Microsoft Corp. (NASDAQ:MSFT) is also foraying into the chip segment to cut its reliance on outsiders. Its Maia 200 AI accelerator chip is designed to run large-scale AI workloads inside Microsoft data centers, while the Cobalt 200 CPU is aimed at improving general cloud computing efficiency on Azure. Together, these custom chips reduce dependence on external suppliers and improve long-term cost control, performance, and scalability.
Mar Vista U.S. Quality Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q1 2026 investor letter:
“Microsoft Corporation’s (NASDAQ:MSFT) stock came under pressure in Q1 as investors grew concerned about the rising costs required to fund its accelerating AI infrastructure build-out in 2026. This, combined with heightened expectations for Azure growth, led to a sell-off following the December quarter earnings report, when Azure revenue grew “only” 39% year over year.
Investors have increasingly questioned the return on investment associated with Microsoft’s large and rapidly expanding capital expenditures tied to AI infrastructure. While these investments are substantial, we believe Microsoft is well positioned to support this growth through its strong and expanding operating cash flows. Although the company has meaningful exposure to OpenAI, OpenAI’s ability to raise over $100 billion should help alleviate investor concerns regarding its capacity to meet large contractual commitments.
Microsoft remains a top portfolio holding, supported by its financial strength, diversified revenue streams, and broad customer base, all of which provide resilience. The company is experiencing strong growth in Azure, its hyperscale cloud platform, which is capacity constrained, alongside increasing adoption of its Copilot offerings across its extensive enterprise customer base. We believe Microsoft should be well positioned to generate attractive long-term returns from its partnership with OpenAI and to effectively monetize generative AI capabilities across its global enterprise IT footprint through its expanding suite of Copilot and AI-enabled products.”
3. Apple Inc. (NASDAQ:AAPL)
Motley Fool Asset Management’s Stake: $145.41 Million
Apple Inc. (NASDAQ:AAPL) received a lot of flak for not jumping on the AI bandwagon and sitting out the massive capex spending chorus. The Cupertino giant was later proved to be right. As fears about roi on AI spending rattle major tech stocks, Apple remains strong with a strong cash position and fundamentals.
Apple iPhone demand is showing signs of a rebound. Apple Inc. (NASDAQ:AAPL) led global smartphone shipments in the first quarter of 2026, with volumes rising about 5% from a year earlier, even as the broader market contracted amid memory shortages and softer demand, according to Counterpoint Research. The firm said Apple Inc. (NASDAQ:AAPL) ranked first globally in Q1 for the first time, capturing a 21% market share alongside its year-over-year growth. It added that the U.S. tech company remains one of the most insulated from the memory crunch, supported by its premium positioning and tightly controlled supply chain.
Apple Inc’s (NASDAQ:AAPL) strong service business is also a huge growth catalyst for the company. This segment includes iCloud, Apple Music, Apple TV+, payments, and App Store fees — all high-margin, recurring revenue streams. The business now accounts for roughly 21% of Apple’s overall revenue and has become a $100 billion a year business.
With over $200 billion in cash and a long history of consecutive dividend growth, Apple Inc. (NASDAQ:AAPL) can make strategic moves to maintain market dominance while also expanding into other high-margin businesses like services, wearables, and emerging tech.
RiverPark Large Growth Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its fourth quarter 2025 investor letter:
“Apple Inc. (NASDAQ:AAPL): AAPL shares rose in 4Q25 following better-than-feared iPhone 17 sell-through trends and stronger Services momentum. The company reported that early adoption of its on-device AI features exceeded internal expectations, particularly in North America and Europe, where attach rates for Pro models remained elevated. Wearables also returned to growth, helped by new health features and improved battery life. While macro softness in China remained a headwind, investors responded positively to evidence of content and advertising revenue re-acceleration within the Services segment, which delivered double-digit growth.
We continue to view Apple as one of the world’s most resilient and profitable businesses, supported by a massive installed base, ecosystem lock-in, and growing high-margin revenue streams. As Apple Intelligence features proliferate across devices, we expect multi-year upgrades, improved monetization, and expanded recurring revenue. With strong cash generation, ongoing share repurchases, and disciplined capital allocation, Apple remains a compelling long term investment.”
2. Alphabet Inc. (NASDAQ:GOOGL)
Motley Fool Asset Management’s Stake: $163.46 Million
Alphabet Inc. (NASDAQ:GOOGL) shares have gained over 100% in the past 12 months. Can the stock keep running? The biggest fear around Alphabet was AI-related threats for its search business. But so far, the company has successfully tackled this potential headwind. In Q4, search and other segment rose 17% year over year. Google still has over 90% of the total market share in search. The company is using AI to counter the threats to its bread and butter. How?
Google Gemini App has reached 750 million monthly active users (MAU)—a massive surge from the 450 million seen at the start of 2025. This growth shows that AI is helping the business rather than hurting it. Alphabet Inc. (NASDAQ:GOOGL) is now showing ads in 25% of these AI results to capture users with “high intent,” especially for shopping. The company uses Gemini to act as a shopping assistant through a new system called Direct Offers. This feature gives personalized deals and loyalty benefits to people who are ready to buy.
Alphabet Inc. (NASDAQ:GOOGL) is also making waves in the AI hardware space. Google is reducing its reliance on expensive Nvidia chips by developing its own hardware, known as Tensor Processing Units (TPUs). A long-term deal with Broadcom secures this chip supply through 2031, helping Google lower costs while building a massive AI infrastructure. External companies are already buying into this system, with Anthropic planning to use 3.5 gigawatts of Google’s TPU power starting in 2027. This shift shows that Google is successfully turning its custom silicon into a high-demand product for the broader AI market.
Alphabet Inc. (NASDAQ:GOOGL) ranks x in our list of the best AI stock picks of Motley Fool Asset Management.
Montaka Global Investments stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q4 2025 investor letter:
Alphabet Inc. (NASDAQ:GOOGL) has large, valuable core businesses that are clear beneficiaries of larger and more powerful AI models. Therefore, any ‘excess’ capacity that might materialise from the data centre buildout over the coming years will more rapidly be absorbed by their internal needs. So overall, we see the existence of large, tech/AI-enabled non-cloud businesses attached to the hyperscalers, not as a risk, but as a major strategic advantage (Click here to see the full text).
1. Nvidia (NASDAQ:NVDA)
Motley Fool Asset Management’s Stake: $163.46 Million
Nvidia’s (NASDAQ:NVDA) full-stack AI platform approach is expected to strengthen its moat in the coming months. Its ecosystem spans integrated hardware, networking, and software leadership, particularly CUDA. Two-thirds of data center sales already come from Grace Blackwell systems. Why does it matter? Grace Blackwell combines CPU, GPU, networking, and software into a tightly integrated AI system and locks customers into Nvidia’s full stack.
Networking is becoming a strong growth driver with strong revenue from NVLink, Spectrum-X, and InfiniBand.
Nvidia’s (NASDAQ:NVDA) new products are expected to keep boosting its revenue. Its Vera Rubin (R100) architecture, which is optimized for agentic AI. Companies are moving from simply training models to running them at scale, which supports Nvidia’s expectation that its data center revenue could hit $1 trillion.
Nvidia (NASDAQ:NVDA) has a forward P/E of roughly 20x to 22x, almost in line with that of the S&P 500. According to Goldman estimates, Nvidia is expected to drive 21% of the total earnings growth for the S&P 500 in 2026. With Big Tech companies expected to spend a whopping $600 billion on capital expenditures in 2026 alone and new AI use cases coming, Nvidia Corp (NASDAQ:NVDA) remains an attractive buy at the current levels.
Baron Opportunity Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its fourth quarter 2025 investor letter:
“At Baron, we are deep research, evidence-based investors. We are positive about AI because it is real. It is the most significant change to the global economy since the internet itself. Every digital interaction of today forward will have AI as the brains of the application. We have investments across all the layers of the AI stack and spanning industries. Our most successful investments to date have been in the infrastructure or compute layer. We were early investors in NVIDIA Corporation (NASDAQ:NVDA), over four years before the ChapGPT moment of November 2022, and it has been more than a 10-bagger for the Fund. Several of us spent a full day with founder and CEO Jensen Huang in the Fall of 2018, where he went to the white board to teach us about AI and why NVIDIA would win.”
While we acknowledge the potential of NVDA to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than NVDA and that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
