AI Spending Could Soar 600%: 2 Brilliant AI Stocks to Buy Now, According to Wall Street (Hint: Not Nvidia or Palantir)

Key Points

• Morgan Stanley estimates artificial intelligence (AI) spending across software and internet companies will increase more than 600% in the next three years.

• Amazon is using artificial intelligence to not only drive revenue growth in cloud services, but also to make its retail business more efficient.

• HubSpot reported solid financial results in the second quarter, driven in part by strong adoption of its artificial intelligence platform Breeze.

• 10 stocks we like better than Amazon ›

Artificial intelligence (AI) expenditures added over one percentage point to U.S. economic growth in the first half of 2025, outpacing consumer spending, which has traditionally been the strongest driver. That momentum is likely to continue in the years ahead. AI spending across software and internet companies will grow more than 600% by 2028, according to Morgan Stanley.

While Nvidia and Palantir have been investor favorites where the AI trade is concerned, Amazon (NASDAQ: AMZN) and HubSpot (NYSE: HUBS) are also well positioned to benefit, and most Wall Street analysts think the stocks are undervalued today.

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• Among 71 analysts, Amazon has a median target price of $264 per share. That implies 14% upside from its current share price of $231.
• Among 36 analysts, HubSpot has a median target price of $679 per share. That implies 31% upside from its current share price of $517.

Here's what investors should know about these AI stocks.

Image source: Getty Images.

1. Amazon

Amazon has evolved from an online bookstore into a titan across three major industries: e-commerce, digital advertising, and cloud computing. The company has developed artificial intelligence products and features across all three business segments, but innovations in retail and cloud services are particularly noteworthy.

Retail

Amazon has built 1,000 generative AI applications to make its retail business more efficient, including tools that optimize inventory placement, demand forecasting, and last-mile delivery. It has also built an AI model that helps robots navigate warehouses faster, and it's building an AI model that lets workers engage robots conversationally. Amazon is also testing humanoid robots for package delivery.

Cloud

Amazon Web Services (AWS) has engineered custom chips for AI training and inference that management says offer better price performance than current GPUs. It has also introduced a generative AI development platform called Bedrock, and recently added tools that assist customers in building and scaling AI agents. Further, AWS is the primary cloud provider for Anthropic, one of the fastest-growing AI start-ups.

Amazon reported second-quarter financial results that crushed estimates on the top and bottom lines. Sales increased 13% to $168 billion on particularly strong sales growth in the advertising segment, coupled with solid momentum in the retail and cloud segments. Operating margin expanded more than a percentage point, and generally accepted accounting principles (GAAP) earnings rose 34% to $1.68 per diluted share.

Wall Street says Amazon's earnings will grow at 10% annually through 2026. That makes the current valuation of 35 times earnings look expensive. But I think analysts are underestimating. Amazon beat the consensus estimate by an average of 22% over the last six quarters, and spending across its three major markets is forecast to increase between 11% annually and 20% annually through 2030. Investors should feel comfortable buying this stock today.

2. HubSpot

HubSpot introduced its marketing automation software in 2006, and the company remains a leader in that space, but its product portfolio has evolved into a full customer relationship management (CRM) platform. It features productivity tools for sales, customer service, and marketing, as well as tools for commerce, data management, and content management.

Last year, HubSpot introduced Breeze, a suite of artificial intelligence features that simplify work across its CRM platform. Breeze includes a general copilot that handles simple tasks like summarizing business data, as well as customizable AI agents built for specific tasks like creating marketing content, engaging sales leads, and answering customer questions.

HubSpot reported solid second-quarter financial results that beat estimates on the top and bottom lines. Its customer count increased 18%, and the average subscription revenue per existing customer increased 1%. Revenue rose 19% to $761 million, and non-GAAP earnings rose 13% to $2.19 per diluted share. CEO Yamini Rangan said strong adoption of AI features across the CRM platform was a key contributor.

Wall Street estimates HubSpot's adjusted earnings will grow at 22% annually through 2026. That makes the current valuation of 61 times earnings look relatively expensive. However, HubSpot consistently beat the consensus earnings estimate in the last six quarters, and I think that trend will continue as the company pursues what management sees as a $128 billion opportunity by 2029. Investors should consider buying a small position.

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Trevor Jennewine has positions in Amazon, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Amazon, HubSpot, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.