The Best 2 AI Stocks to Buy in 2025

It may appear to be the end of the party to investors seeking true bargains in this age of technology stocks that appear to set new records every month. However, in the fury on Wall Street over the AI boom, two industry giants who seem highly undervalued are Alphabet and IBM. These two companies have huge artificial intelligence ambitions, meet the financial requirements well, and appear on the radar of value-oriented investors only.

Why is AI in the Limelight in 2025?

The present year has plunged the world stock markets into a tornado. The S&P 500 currently trades at nearly 29 times its trailing earnings well above the historical median of 17.9 times. A large part of it can be attributed directly to the greedy appetite of everything A.I. i.e., chipmakers, cloud giants, enterprise solution providers and so on. Investors, driven by FOMO, have been crowding into such popular stocks as Microsoft and Nvidia where valuations are already stretched.

However, there are calmer giants who are actually doing something valuable and scalable and profitable. The companies like Alphabet (parent of Google) and IBM have embedded AI into their businesses and now are trading at relative discounts relative to their peers despite almost every Big Tech name launching flashy new products related to AI.

Alphabet

The alphabet is in the center of the AI revolution. Yet, in the heat of the chase, its stock is a bargain of sorts, where it trades at 18.7 times forward earnings, compared to 32.8 times forward earnings in Microsoft and 361 times in Nvidia. The 2025 strategy of Alphabet relied on incorporating AI into search, cloud, and video products at a scale the company has never seen before:

• Achieved Results: In Q2 of 2025, revenues reached a record high of 96.4b (14% increase in revenues per annum), net income was 28.2b (inherited 19% increase in net income), and the record results surpassed Wall Street expectations.
• Overviews of AI: AI-based search summaries at Alphabet are changing the search and leading to new high-value commercial queries, with its AI-based search summaries already serving more than 2b users each month in 200 countries and 40 languages.
• YouTube Shorts: The daily views were over 200b, establishing YouTube as the streaming giant when it comes to viewing time in the United States.
• Financial Muscle: Despite an ambitious increase in capital expenditures, which this study and report estimate will reach $85b by 2025 to expand on its AI infrastructure, Alphabet has the latest financial reports the of $95.32b cash and a trailing free cash flow of $66.7b that underscores this financial muscle as compared to other global tech companies.

Gemini 2.5 Pro Model The next-gen AI engine of Alphabet is surging ahead of competitors in complex reasoning and is much more popular with developers (80%) than in early 2024. The industry confidence is signified by about 9m developers using Gemini 2.5 models.

Though a few fears have been expressed in the marketplace concerning massive investments coupled with the perceived menace in the use of AI browsers. Alphabet has some tricks to play with in terms of monetization AI capability and noise. Its size, track record of continuing innovation and financial discipline create an image of a firm that is gearing up to spend another 10 years on top.

IBM

IBM is not a company that makes tech news in the same way as its more high-flying competitors, but is one of the most underreported tales in mandatory tech. Based on forward earnings, trading at 24 times, IBM is still much cheaper than Microsoft and Nvidia despite fantastic Q2 2025 results. IBM is undergoing a remarkable turnaround, driven by a series of strategic initiatives that have begun to deliver tangible results in 2025.

The $34 billion acquisition of Red Hat has proven transformative, with Red Hat’s revenues jumping 15% year over year in the second quarter. Notably, OpenShift, its flagship hybrid cloud platform, saw revenues surge by 20%, pushing annual recurring revenue in that segment to $1.7 billion, a clear sign of strong traction in the hybrid cloud market. IBM has also doubled down on enterprise AI with its Watsonx suite, targeting sectors that demand rigorous security and compliance, such as banking, insurance, and government.

The recent integration of Seek AI’s natural language technology further enhances Watsonx’s capabilities, enabling smarter automation and more intuitive interactions. IBM’s generative AI business continues to strengthen, with the U.S. AI pipeline surpassing $7.5 billion in Q2, up from just over $6 billion last quarter, indicating robust momentum in enterprise deals. Moreover, software now accounts for 45% of IBM’s revenues, and the recurring annual run rate in this category climbed to $22.7 billion a 10% gain year over year which fosters revenue stability and boosts investor confidence.

The infrastructure segment is also enjoying a renaissance, highlighted by a 67% revenue increase in IBM Z mainframes in Q2, reflecting heightened demand for secure, high-performance computing as organizations navigate the dual challenges of digital transformation and cybersecurity. The falling share after Q2 (slower sales of some software) does not deter the general progress of the company heading towards AI-driven enterprise solutions. The shift towards commodities and towards high-margin tech resilience is already happening.

Opportunities for the Two Companies

As the biggest and most profitable technology players in the world are leveraging with smashing reinvestments, it raises another benefit, and another incentive. Microsoft and Nvidia stand out with high price multiples, but Alphabet and IBM have renewed growth, dominant market share and restrained capital austerity.

The general panic of most investors is always that there are deals because they are dealt with. However, the figures are speaking otherwise in the case of Alphabet and IBM, where they are experiencing overreaction in the market and not worsening. Alphabet is a broad trench in search, cloud and AI, which offers it some flexibility and resilience. The shift to enterprise AI provides IBM with a large and profitable market that Big Tech has largely overlooked in its consumer focus.

Why These Bargains Can be Profitable?

When peering into the future, it would appear that both Alphabet and IBM would be particularly advantaged by secular trends in cloud, AI, and digital transformation, not just by 2025, but in general throughout the next decade. Alphabet is likely to further defeat the AI search and cloud infrastructure, including its domination in digital video, and this indicates a higher potential to monetize. They are not wild guesses; they are already reflected in the financial performance.

The rise in the AI enterprise market that IBM is experiencing arrives at a moment when governments and its fortune 500 clients, which are less concerned with hype than dependability, are in desperate need of secure customizable AI. An investor that is capable of filtering out the headline hunting and keeping a level head might also discover that, five years down the road, these were not just stocks to buy in a euphoric market, but the very base on which the next AI-fuelled bull market might ride.