U.S. stock markets closed first-quarter 2025 on a negative note after two years of an impressive bull run. The technology sector, particularly artificial intelligence (AI)-related stocks, suffered the most following the Fed’s ambiguity about further lowering interest rates anytime soon and the fear of a near-term recession.

In the first half of second-quarter 2025, Wall Street remained more volatile due to the Trump administration’s tariffs and trade policies, as well as their impact on the U.S. economy, particularly on an already elevated inflation rate.

Despite this headwind, several AI stocks that lagged in the first quarter have flourished in the past month. Here, we recommend five such AI stocks with a favorable Zacks Rank. Investment in these stocks should be fruitful in the near term.

These stocks are: AppLovin Corp. APP, Amphenol Corp. APH, Arista Networks Inc. ANET, Broadcom Inc. AVGO and Twilio Inc. TWLO. These stocks have strong revenue and earnings growth potential for 2025 and have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks in the past month.Zacks Investment Research

Image Source: Zacks Investment Research

AppLovin Corp.

Zacks Rank #1 AppLovin is engaged in building a software-based platform for mobile app developers to enhance the marketing and monetization of their apps in the United States and internationally. APP provides a technology platform that enables developers to market, monetize, analyze and publish their apps.

AppLovin’s last reported financial results demonstrate its strong fundamentals and growth potential. The introduction of APP’s AI-powered AXON 2.0 technology and strategic expansion in gaming studios have significantly boosted revenue growth. APP’s Ai-enabled Audience+ marketing platform is also boosting its reach into direct-to-consumer and e-commerce space.

AppLovin has an expected revenue and earnings growth rate of 24.3% and 85.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 25.6% in the last 30 days.

Amphenol Corp.

Zacks Rank #1 Amphenol provides connectivity solutions using AI and ML (machine learning) technologies. It provides AI-powered high-density, high-speed connectors and cables, and interconnect systems optimized for signal integrity and thermal performance.

Amphenol benefits from a diversified business model. APH’s strong portfolio of solutions, including high-technology interconnect products, is a key catalyst. Expansion of spending on both current and next-generation defense technologies bodes well for APH’s top-line growth. Apart from Defense, APH’s prospects ride on strong demand for its solutions across Commercial Air, Industrial and Mobile devices.

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The Andrew acquisition is expected to add roughly $0.09 to earnings in 2025. APH’s diversified business model lowers the volatility of individual end markets and geographies. Its strong cash-flow-generating ability is noteworthy.

Amphenol has an expected revenue and earnings growth rate of 32.3% and 40.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.5% in the last seven days.

Arista Networks Inc.

Zacks Rank #2 Arista Networks is well-positioned with the right network architecture for client-to-campus data center cloud and AI networking backed by three guiding principles. These include the best-in-class, highly proactive products with resilience, zero-touch automation and telemetry with predictive client-to-cloud one-click operations with granular visibility and prescriptive insights for deeper AI algorithms.

ANET’s EOS Smart AI Suite and Arista AVA (Autonomous Virtual Assist) enhance AI job monitoring, deep-dive analytics, and proactive performance issue resolution. Its AI suite also focuses on network security and optimization.

ANET’s AI-powered cloud networking solutions provide predictable performance and programmability, enabling seamless integration with third-party applications for network management, automation and orchestration.

Arista AVA offers augmentation of pervasive visibility, continuous threat detection, and enforcement. The growing demand for 200- and 400-gig high-performance switching products augurs well for ANET’s long-term growth.

Arista Networks has an expected revenue and earnings growth rate of 18.7% and 12.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4% in the last 30 days.

Broadcom Inc.

Broadcom has been benefiting from strong demand for its networking products and custom AI accelerators (XPUs). Strong demand for AVGO’s application-specific integrated chips, designed to support AI and machine learning, aids top-line growth. AVGO expects second-quarter fiscal 2025 AI revenues to jump 44% year over year to $4.4 billion.

The acquisition of VMware has benefited Infrastructure software solutions. As of fiscal first quarter, roughly 70% of Broadcom’s largest 10,000 customers have adopted VMware Cloud Foundation. AVGO’s expanding AI portfolio, along with a rich partner base, reflects solid top-line growth potential.

AVGO’s XPUs are necessary for training generative AI models, and they require complex integration of compute, memory, and I/O capabilities to achieve the necessary performance at lower power consumption and cost.

AVGO’s next-generation XPUs are in 3 nanometers and will be the first of their kind to market in that process node. Broadcom remains on track for volume shipment of these XPUs to its hyperscale customers in the second half of fiscal 2025. AVGO sees massive opportunities in the AI space as specific hyperscalers have started to develop their own XPUs.

Broadcom believes that by 2027 each of its three hyperscalers would deploy 1 million XPU clusters across a single fabric. Serviceable Addressable Market for XPUs and networks are expected to be between $60 billion and $90 billion in fiscal 2027 alone.

Broadcom has an expected revenue and earnings growth rate of 21% and 35.5%, respectively, for the current year (ending October 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.6% in the last 60 days.

Twilio Inc.

Zacks Rank #2 Twilio is a leading provider of cloud communications Platform-as-a-Service (PAAS) in the United States and internationally. TWLO is focusing on generative AI offerings to tap the growing opportunities in this space.

In this regard, TWLO launched Customer AI technology in June 2023, which powerfully combines customer engagement platform data, generative and predictive AI, and large language models (LLMs) to unlock stronger customer relationships for brands.

TWLO is integrating generative AI capabilities across its platform and every customer touch point. The company believes that by training LLMs for customers with their data inside its Segment customer data platform, Twilio will be able to help customers enter the AI race multiple steps ahead of their peers.

TWLO has also partnered with Alphabet Inc. (GOOGL) for Google Cloud to integrate generative AI into the Twilio Flex customer engagement platform. Twilio’s initiative to integrate generative and predictive AI technology across its platform is likely to boost its revenue growth over the long-run.

Twilio enables companies to create personalized, customer-aware experiences powered by OpenAI. Through this integration, Twilio customers will be able to use OpenAI’s GPT-4 model to power new generative capabilities in Twilio Engage, its multichannel marketing solution built on the Segment Customer Data Platform.

Twilio has an expected revenue and earnings growth rate of 7.8% and 21.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 6% in the last 30 days.

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Amphenol Corporation (APH):Free Stock Analysis Report

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