How I'd Allocate $10,000 to AI Stocks in Today's Market

How I’d Allocate $10,000 to AI Stocks in Today’s Market

Shopify (TSX:SHOP) is one of Canada’s most compelling AI stocks.

Andrew Button

Author Bio

Andrew “A.J.” Button is a financial writer with a longstanding interest in value investing and international markets. He began investing at a young age, building a portfolio of dividend stocks to help pay for university. After stepping away from investing for a time, he rediscovered his passion in 2019 when he began working as a freelance financial writer. Since then, Andrew has built a diversified investment approach spanning Canadian, U.S., and international equities, as well as guaranteed investment certificates (GICs) and money market funds. He is particularly interested in international stocks, drawn to their dividend potential and long-term growth opportunities, while maintaining an interest in Canadian businesses. Before joining The Motley Fool, Andrew worked as a freelance copywriter specializing in financial services. He continues to write for financial publications and share his thoughts on stocks through social media.

Education and Professional Credentials

Canadian Securities Course (CSC)
CFA Program Level I examination completed

Areas of Expertise

Value investing, Canadian equities, U.S. stocks, international equities, dividend investing, long-term investing, GICs, money market funds, and portfolio diversification.

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Published April 4, 2025 9:15 pm EDT

AI stocks are some of the hottest equities in the markets today. Involved in the development of apps like ChatGPT, Gemini and Dall-E, they are attracting a lot of investment.

This year, investors have the opportunity to buy AI stocks at (relatively) discounted prices. Following hot gains in 2023 and 2024, AI stocks are taking a breather this year, with the U.S.’s tech-heavy NASDAQ-100 Index down 9% for the year (as of Wednesday’s close).

To some extent, this year’s selling in AI stocks is justified. Donald Trump recently announced a 32% tariff on all goods from Taiwan, the country that manufactures much of the world’s AI infrastructure. However, Trump’s treasury secretary Howard Lutnick has said that countries like Taiwan will have the opportunity to negotiate the tariffs away. So, AI stocks may be worth a look right now. In this article, I will explore where I’d allocate money in AI in 2025.

The letters AI glowing on a circuit board processor. — Source: Getty Images

Chip companies

AI chip companies have been some of the best performing AI stocks over the last two years. They supply the critical components that AI developers need to run their apps –chiefly CPUs and GPUs.

Consider Taiwan Semiconductor Manufacturing (NYSE: TSM). It’s a Taiwanese semiconductor giant that manufactures 60% of the world’s computer chips, and 90% of the most advanced chips. Its stock has been taking a beating in recent weeks thanks to Donald Trump’s trade war. As a result, it is much cheaper than it has been for most of the last two years, trading at just 23.9 times adjusted earnings and 20.9 times reported earnings. For a company growing its earnings at 40% year-over-year, these multiples are pretty low.

I actually owned TSM stock in the past. I sold it this year for $205. Today, with the stock trading closer to $160, I’d consider getting involved again.

Software companies

Next up we have the software companies that develop AI. These are having a harder time monetizing and turning profits on AI than the chip companies are, but they are successful companies nonetheless.

Take Shopify Inc (TSX: SHOP) for example. It’s a Canadian tech company that uses AI to help people sell their products online. It hosts online shops and also has a payment processing service. The company’s main AI service is “Shopify Magic,” which helps users write copy and design marketing materials for their businesses. The company has been thriving lately, with revenue up 26%, earnings up 1,409% and free cash flow up 49% in the trailing 12-month period. Overall, Shopify stock is worth a look. My conviction with this stock is not as high as with TSM – I’m not planning on buying it personally – but I definitely think it merits further research.

Foolish takeaway

In 2025, AI stocks are finally taking a dip after years of bullishness. The big U.S. AI stocks are down by significant percentages for the year. Investors do have to consider the impact of Donald Trump’s trade policies on these stocks – the 32% tariff on Taiwan is cause for concern. However, the lower these stocks go, the more compelling they become. So, I have my eye on AI stocks in 2025.