5 AI Stocks to Buy Before the Next Leg of the Rally

Artificial intelligence (AI) has been one of the biggest drivers of the stock market. Over the past year, the Nasdaq CTA Artificial Intelligence Index, which tracks AI stocks in a variety of sectors, is up more than 60% -- soundly beating the 25% gain of the much larger Nasdaq Composite.

The AI trend shows little sign of slowing down, and investors have plenty of ways to invest, including chips, software, and cloud computing. Here are five AI stocks to buy before the next leg of the AI rally takes place -- with each playing a critical role in the AI ecosystem.

The compute pick: Nvidia

Nvidia (NASDAQ: NVDA) has arguably been the biggest overall winner in the AI race. The company's graphics processing units (GPUs) have been essential to training and running AI programs, making Nvidia the world's largest publicly traded company by market cap at $4.7 trillion.

Nvidia's GPUs power data centers worldwide, enabling generative AI, machine learning, and other complex computing tasks. And now it's taking the next step with its Vera Rubin architecture that uses NVLink chip-to-chip interconnects to allow GPUs and CPUs to share memory space and work more efficiently.

Nvidia rakes in the lion's share in AI spending, with CEO Jensen Huang estimating that the company receives $35 billion for every $50 billion the industry spends on AI infrastructure. Considering that hyperscalers have committed to spending at least $650 billion this year alone, Nvidia stock is primed for another huge run.

The infrastructure pick: Nebius Group

Nebius Group (NASDAQ: NBIS) is an artificial intelligence cloud services company that is building data centers and computing capacity for companies to train and run their AI programs. Nebius has a key partnership with Nvidia, which has invested $2 billion to help Nebius scale its capacity.

The deal calls for Nebius to deploy more than 5 gigawatts of capacity by the end of 2030, and gives Nebius early access to Nvidia's next-generation chip architecture.

Nebius has other partnerships as well, including a five-year AI infrastructure deal with Microsoft valued at up to $19.4 billion and up to $27 billion in commitments from Meta Platforms.

"The demand is broadening across industries," CEO Arkady Volozh said. "Today, we typically see several customers competing for every GPU we bring online."

Image source: Getty Images.

The storage pick: Sandisk

Sandisk (NASDAQ: SNDK) isn't just having a good year. It's having a great year. Sandisk stock is up more than 600% in 2026, making it the best-performing stock in the S&P 500.

The company's storage products are in high demand in data centers to help manage the data needed to run high-level AI programs. In short, it doesn't matter how many Nvidia GPUs are powering an AI program if there's no place to store the data.

The company saw data center sales of $1.46 billion in the fiscal third quarter of 2026 (ending April 3), up 645% from a year ago and 233% from Q2.

"Data center has become our fastest-growing market, and the workloads driving that demand -- including inference, reasoning, and agentic systems -- represent a structural and durable shift in how the world's most consequential technology is built and deployed," CEO David Goeckeler said.

The software pick: Palantir Technologies

I don't think anyone is doing a better job than Palantir Technologies (NASDAQ: PLTR) in developing unique, AI-powered software that is changing how the world works. Palantir integrated its Artificial Intelligence Platform into its Gotham and Foundry products to deliver real-time analytics and actionable insights to intelligence agencies and the military.

But there are commercial applications as well, and that's helped Palantir grow even faster. Palantir's AI-powered platforms help companies manage workflows, inventory, supply chains, and provide competitive analysis. Commercial revenue in the first quarter jumped 133% on a year-over-year basis, reaching $595 million for the quarter.

Management increased its full-year guidance from a range of $7.182 billion to $7.198 billion to a range of $7.65 billion to $7.662 billion.

The total platform pick: Alphabet

It's hard to top Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and the role it plays in AI. Alphabet utilizes AI to optimize advertising on its powerful Google search engine and YouTube platform. It incorporates AI in search responses. It makes Tensor Processing Units (TPUs) as a low-cost alternative to Nvidia's GPUs. And its Gemini AI model is an effective AI assistant that can help generate text, images, and videos.

And that impressive list doesn't even include Google Cloud, the company's fast-growing cloud computing segment. Google Cloud revenue in the first quarter was $20.02 billion, up 63% from a year ago. The segment's operating income was $6.6 billion, which tripled from last year, and operating margins jumped from 17.8% to 32.9%.

Management said Google Cloud's backlog nearly doubled on a sequential basis, rising to $462 billion by the end of the first quarter. And the majority of the backlog is expected to be recognized as revenue over the next 24 months.

Patrick Sanders has positions in Nebius Group, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.