Two of these companies are offering something in high demand: capacity for AI workloads.
The third company on this list just signed on a $10 billion AI customer.
The "Magnificent Seven" stocks, which drove indexes higher over the past couple of years, continued that job in recent months. And for good reason. Most of these tech giants are playing key roles in the high-growth industry of artificial intelligence (AI), a market forecast to reach into the trillions of dollars by the early 2030s. Investors, wanting to benefit from this growth, have piled into these current and potential AI winners.
But the Magnificent Seven stocks aren't the only ones that may be set to excel in AI and deliver growth to investors. As the AI story progresses, the need for infrastructure capacity and certain equipment could result in surging sales for other companies too. That's why my prediction is the following three stocks are on track for major strength in AI and may even outperform the Magnificent Seven over the coming decade. Let's check them out.
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Oracle (NYSE: ORCL) started out as a database management specialist, and it still is a giant in this area, but in recent times it's put the focus on growing its cloud infrastructure business -- and this has supercharged the company's revenue.
AI customers are rushing to Oracle for capacity to run training and inferencing workloads, and this movement helped the company report a 55% increase in infrastructure revenue in the recent quarter. And Oracle predicts this may be just the beginning. The company expects this business to deliver $18 billion in revenue this year -- and grow that to $144 billion four years from now.
Investors were so excited about Oracle's forecasts that the stock surged about 35% in one trading session, adding more than $200 billion in market value. Customers are seeing the value of Oracle's database technology paired with AI -- a combination that allows them to securely apply AI to their businesses -- and this may keep the demand for Oracle's services going strong and the stock price heading higher as the AI story enters its next chapters.
CoreWeave (NASDAQ: CRWV) has designed its cloud platform specifically for AI workloads, and the company works closely with chip leader Nvidia. So far, this has resulted in CoreWeave's being the first to make Nvidia's latest platforms generally available to customers. This is a big plus as companies scramble to gain access to Nvidia's innovations as soon as possible.
Nvidia also is a believer in CoreWeave's potential as the chip giant holds shares in the company. As of the second quarter, CoreWeave makes up 91% of Nvidia's investment portfolio. Considering Nvidia's knowledge of the AI landscape, this investment is particularly meaningful.
Customers may also like the flexibility of CoreWeave's services, allowing them to rent graphics processing units (GPUs) by the hour or for the long term. All of this has led to explosive revenue growth for the company. In the latest quarter, revenue tripled to more than $1.2 billion.
The growing need for AI infrastructure should translate into ongoing explosive growth for CoreWeave, and that may make it a stronger stock market performer than long-established players -- such as the Magnificent Seven.
Broadcom (NASDAQ: AVGO) is a networking leader, with its products present in a variety of places from your smartphone to data centers. And in recent times, demand from AI customers -- for items such as customized chips and networking equipment -- has helped revenue soar.
In the recent quarter, Broadcom said AI revenue jumped 63% year over year to $5.2 billion, and the company forecast AI revenue of $6.2 billion in the next quarter. The company already is working on custom chips for three major customers, and demand from them is growing -- on top of this, Broadcom just announced a $10 billion order from another customer, one that analysts and press reports say may be OpenAI.
Meanwhile, Broadcom's expertise in networking is paying off as high-performance systems are needed to connect customers' growing numbers of compute nodes. As AI customers scale up their platforms, they need to share data between more and more of these nodes -- and Broadcom has what it takes to do the job.
We're still in the early phases of this AI buildout -- as mentioned, the AI market may be heading for the trillion-dollar mark -- and Broadcom clearly will benefit. And that may help this top tech stock to outperform the Magnificent Seven over the next decade.
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Adria Cimino has positions in Oracle. The Motley Fool has positions in and recommends Nvidia and Oracle. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.