Prediction: These 5 First-Half AI Stock Losers Will Be Second-Half Winners

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In the initial phase of 2025, many potential AI stock investments faced difficulties, predominantly within the software sector. Yet, the latter part of the year might present a contrasting picture.

Let’s examine five stocks that underperformed with AI in the initial six months of 2025, but appear likely to recover during the latter part of the year.

Alphabet

The stock of Alphabet (GOOGL) (GOOG), often perceived as puzzling in the market, continues to be misconstrued by many investors. Their concerns frequently revolve around AI potentially threatening its fundamental search business, yet they overlook the broader context. Google is not merely a search company; it functions as a comprehensive platform for content discovery, boasting significant distribution advantages and backed by decades of behavioral data.

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With its Chrome browser holding over 65% of global market share and Android operating system powering more than 70% of smartphones worldwide, Alphabet enjoys a significant competitive advantage. In addition to this, Google has strategic partnerships to be the default search engine on Apple devices and various other browsers, which adds to its strength. As search engines and AI technologies continue to advance, this widespread presence becomes increasingly valuable.

Simultaneously, Google has significantly improved its services with the introduction of an AI-enhanced Search Experience. In a recent poll by Oppenheimer, a staggering 82% of users found it more useful than conventional search methods, and 75% preferred it over ChatGPT. Notably, Google doesn’t require users to alter their habits and transition to its applications. Instead, all they need to do is click on the AI Mode to access this enhanced experience directly from their existing searches.

Google Cloud’s momentum is growing significantly. Last quarter saw a 28% increase in revenue for this sector, and they’re pouring resources into expanding their infrastructure to meet the rising demand. Moreover, their underestimated ventures like Waymo’s autonomous taxi service and the Willow quantum chip add to Alphabet’s potential for a strong recovery in the second half of the year.

GitLab

Another often-misinterpreted entity is GitLab (GTLB). Investors express concern that the rise of AI might mean fewer roles for coders within organizations. Nevertheless, so far AI seems to have stimulated rather than reduced software development. Meanwhile, GitLab has been stealthily evolving into a platform for the entire software development lifecycle.

The business made a significant stride in this area by unveiling GitLab 18, featuring more than 30 fresh functionalities. Among them is the Duo Agent Platform, enabling users to implement AI agents throughout the entire development process, from coding to testing and even compliance checks. This is noteworthy, as per William Blair’s assessment, developers typically dedicate just around 20% of their time towards coding tasks.

The business has been consistently increasing its income at a robust pace, even recording a 27% growth in the last quarter. This expansion is primarily fueled by an influx of new clients and existing customers purchasing additional seats and upgrading their tiers. Additionally, GitLab has been broadening significant collaborations, such as with Amazon.

Looking forward, GitLab seems poised for success as it focuses on streamlining overall software development processes. It appears to be a compelling choice for potential investors seeking a robust company with potential for recovery.

Salesforce

Salesforce has been reorienting its Customer Relationship Management (CRM) system towards Artificial Intelligence (AI) for the past year. The latest offering, Agentforce, boasts over 4,000 paying customers and stands at the core of what could potentially grow into a substantial digital workforce platform in the future.

The business aims to merge apps, data, automation, and metadata into a unified system known as ADAM. This integrated platform serves as the base for developing and expanding AI agents, thereby fostering the growth of a digital workforce. Additionally, they have introduced a more adaptable pricing structure based on results to boost its usage.

Salesforce dominates the market for Customer Relationship Management (CRM) software currently, and their move towards AI-powered agents might significantly boost their growth. If Agentforce manages to increase its popularity, the company’s stock, which has been sluggish in the first half of the year, could experience a rebound.

ServiceNow

Although ServiceNow (NOW) might not initially seem like an AI-related name, it indeed leverages artificial intelligence to reshape its operations. Initially established within the realm of Information Technology management, ServiceNow has since broadened its scope into areas such as human resources, finance, and customer service.

ServiceNow has consistently excelled at bridging isolated teams within companies and facilitating smoother workflows by optimizing their business processes. They’ve elevated this approach with the integration of AI into their Now Platform, further enhancing its effectiveness. Notably, AI-enhanced Pro Plus deals have experienced a fourfold increase compared to the same period last year, indicating growing demand for their services. Given the rising emphasis on cost reduction through efficiency and automation, ServiceNow seems poised to capitalize on this trend.

As a tech enthusiast, I’m confidently bullish on ServiceNow! Despite concerns about enterprise software spending, this cost-saving powerhouse is poised to thrive in today’s climate. This resilience sets the stage for a strong comeback for its stock later in the year.

SentinelOne

SentinelOne’s (S) shares faced challenges during the initial months of the year, however, there are strong indications pointing towards a significant improvement in the second half. This optimism arises primarily from the upcoming escalation of its partnership with Lenovo.

Beginning in the second half of the year, Lenovo – currently the world’s leading enterprise PC provider – plans to install SentinelOne’s Singularity Platform on all newly sold computers. This means that users buying new Lenovo devices will have this AI-driven security platform pre-installed. Additionally, existing Lenovo users can upgrade to benefit from SentinelOne’s advanced cybersecurity platform. This partnership presents a significant advantage for the cybersecurity company.

SentinelOne is currently experiencing robust financial expansion, with a 23% increase just last quarter. Although CrowdStrike holds the top spot in the endpoint security industry, Gartner praises SentinelOne’s platform highly. Moreover, its Purple AI solution, designed to aid analysts in tracking down intricate security threats using natural language commands, has been their most rapidly expanding offering to date.

Essentially, SentinelOne is a reliable firm with shares priced lower than many larger competitors. The Lenovo agreement could serve as a significant driver in the second part of the year.

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2025-07-20 16:19