Artificial intelligence (AI) continued to be a major investment theme in 2024, driving tech stocks to record highs as companies continued to pour millions into the emerging technology. With no signs of slowing down, UBS analysts have highlighted two top AI stock picks for 2025: Dell Technologies (DELL) and TD SYNNEX (SNX)

Dell stands out for its dominance in AI servers, with its Infrastructure Solutions Group projected to achieve 10% revenue growth and a 15% boost in free cash flow. Similarly, TD SYNNEX shines with its growing AI infrastructure business, Hyve, which promises strong earnings and valuation growth.

Both companies have received bullish ratings on Wall Street and present compelling growth opportunities in the AI ecosystem, backed by favorable risk-reward dynamics and strategic positioning. Here’s why these stocks could be excellent additions to your portfolio for 2025.

AI Stock #1: Dell

Dell Technologies (DELL) is a leader in IT infrastructure, serving enterprise and consumer markets. In terms of artificial intelligence, it offers servers, networking equipment, and solutions critical for hyperscale data centers driving the AI boom.

Valued at $77 billion by market capitalization, shares of Dell have rallied 42% over the past year, outpacing the S&P 500 Index ($SPX) gain of 26.9%. However, the stock currently trades 38% below its 52-week peak of $179.70, signaling a potential buy-the-dip opportunity.

From a valuation perspective, Dell is trading at 15.78x forward earnings, significantly below the S&P 500 ratio of 25.2x. This valuation reflects tempered growth expectations but leaves room for upside as AI-related revenues accelerate.

On the financial front, Dell’s third-quarter report in late November topped earnings expectations but slightly missed on sales. The tech company concluded the quarter with revenue of $25 billion, marking a 10% year-over-year increase. The Infrastructure Solutions Group led the way, growing 34% year-over-year to $11.4 billion, driven by a 58% surge in server and networking revenues. Conversely, the Client Solutions Group faced a 1% decline, with consumer sales falling 18%, while commercial revenues rose 3%.

Dell’s operating strategy focuses on profitability and shareholder returns. It plans to return 80% of free cash flow through dividends and stock buybacks. The dividend, yielding 1.62%, increased by 20% this fiscal year, with further annual hikes of at least 10% expected through fiscal 2028.

Another major catalyst for the firm could be its position as a tech supplier for Microsoft’s (MSFT) Wisconsin data center project and Elon Musk’s xAI facility in Memphis. These developments exemplify Dell’s ability to capitalize on expanding AI demands, with the hyperscale data center market projected to exceed $220 billion by 2025.

Analysts see room for further gains throughout the year. Those tracking Dell expect full-year revenue of $96 billion, with EPS projected to reach an impressive $7.82.

Overall, Dell is a consensus “Strong Buy” from 20 analysts in coverage, with a mean price target of $149, which implies roughly a 35% upside premium.

AI Stock #2: TD SYNNEX

Founded in 1980, TD SYNNEX (SNX) is a global distributor and solutions aggregator specializing in end-to-end IT solutions and services. Its portfolio includes computing devices, software, and advanced data center technologies. The company boasts a market capitalization of $11.6 billion at the time of writing.

The new year ushered in a bullish period for SNX stock, which has surged 17% year-to-date and reached an all-time high above $138. Despite trading at its peak, the stock remains attractively valued at 11.47 times forward earnings.

In its most recent earnings report on Jan. 10, TD SYNNEX posted revenue of $15.8 billion, marking a 10% year-over-year increase.. Adjusted EPS came in at $3.09, down slightly from the year-ago period. 

Looking ahead, TD SYNNEX projects Q1 2025 revenue between $14.4 billion and $15.2 billion, with adjusted EPS guidance ranging from $2.65 to $3.15. These projections show confidence in its ability to capitalize on market opportunities.

Furthermore, SNX’s recent partnership with Qlik to expand AI-driven analytics adoption across North America and Europe enhances its leadership in innovative IT solutions. This collaboration complements its strategic alliances with International Business Machines (IBM), Cisco (CSCO), and Amazon (AMZN), positioning the company for sustained growth in the evolving technology landscape.

Analysts remain optimistic about SNX's performance and future prospects, reflected in their consensus “Strong Buy” rating. The mean price target of $145.27 suggests nearly 6% upside potential from the current price.