Wall Street’s impressive bull run that started at the beginning of 2023 suffered a blow last month. This high-flying northward journey was predominantly supported by an astonishing rally in the technology sector, buoyed by the explosive growth of generative artificial intelligence (AI).

From last month, market participants’ pain has increased manifold. Year to date, U.S. stock markets are in negative territory and the tech-heavy Nasdaq Composite is in correction zone. AI-centric stocks, like AI chipsets and infrastructure manufacturers, data center equipment developers and nuclear power producers suffered the most. 

The primary reasons behind these are the highly overstretched valuation of AI-stocks, fear of a near-term recession in the U.S. economy, uncertainty about future interest rate cuts by the Fed and the availability of the low-cost generative AI platform from China’s DeepSeek. 

However, the AI frenzy remains intact. Here we recommend five non-tech companies using extensive AI applications. These stocks have a favorable Zacks Rank and tremendous near-term price upside potential. These are PayPal Holdings Inc. PYPL, Visa Inc. V, Upstart Holdings Inc. UPST, Netflix Inc. NFLX and Johnson Controls International plc JCI. 

5 AI-Powered Non-Tech Stocks to Buy

These five stocks have solid growth potential for 2025 and have seen positive earnings estimate revisions over the past 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The chart below shows the price performance of our five picks year to date.

Image Source: Zacks Investment Research

PayPal Holdings Inc.

PayPal Holdings is benefiting from robust growth in total payment volume. Strengthening customer engagement on PYPL’s platform is a major positive. Venmo’s improving monetization efforts and rising adoption rate across various platforms are aiding total active accounts growth. 

PYPL has been focusing on leveraging AI to enhance its consumer and merchant experiences. Using AI, PYPL is continuously improving transaction efficiency and providing deeper insights into consumer behavior. PYPL’s AI platforms like Fastlane and Ads are giving technological edge to the company. 

PayPal Holdings has an expected revenue and earnings growth rate of 3.7% and 8%, respectively, for the current year. The Zacks Consensus Estimate for the current-year earnings has improved 2.4% in the past 60 days. Moreover, PYPL currently has a return on Equity (ROE) of 23.67%, compared with the industry’s ROE of 13.71% and the S&P 500’s ROE of 17.11%.

Lucrative Short-Term Upside Potential for PYPL Stock

PayPal Holdings is currently trading at an attractive valuation compared to its peers. The stock has forward price/earnings (P/E) of 13.58X, below the industry’s P/E of 14.91X and the S&P 500’s P/E of 18.42X. It has a price/sale (P/S) of 2.12X, compared with the industry’s P/S of 2.39X and the S&P 500’s P/S of 2.91X. Moreover, it has a price/book (P/B) of 3.30X, compared with the industry’s P/B of 3.51X and the S&P 500’s P/B of 3.50X.

The short-term average price target of brokerage firms for the stock represents an increase of 36.2% from the last closing price of $68.62. The brokerage target price is currently in the range of $70-$125. This indicates a maximum upside of 82.2% and no downside. 

Visa Inc.

Visa’s strategic acquisitions and alliances are fostering long-term growth and consistently driving revenues. It expects net revenues to grow in low double-digits in fiscal 2025. V’s growth is fueled by continued increases in payments, cross-border volumes and sustained investments in technology. It is witnessing significant profit growth. 

The ongoing shift to digital payments is advantageous for Visa, with strong domestic volumes supporting its overall performance. With fraud cases on the rise and AI adoption increasing, V’s services are in high demand. V has embedded AI and generative AI into over 100 products, primarily for fraud prevention and cybersecurity. 

Visa has invested $3.5 billion in the past 10 years in order to rebuild its data platform. V’s technology helps prevent $40 billion in fraud attempts annually. Through strategic diversification, innovation, and AI-driven security, V is well-positioned for long-term growth.

Visa has an expected revenue and earnings growth rate of 10.2% and 12.4%, respectively, for the current year (ending September 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.7% in the past 60 days. V has a current dividend yield of 0.71%. Moreover, V currently has an ROE of 54.79%, compared with the industry’s ROE of 13.71% and the S&P 500’s ROE of 17.11%.

Impressive Short-Term Upside Potential for V Shares

The short-term average price target of brokerage firms for the stock represents an increase of 15.2% from the last closing price of $332.84. The brokerage target price is currently in the range of $310-$410. This indicates a maximum upside of 23.2% and a downside of 6.9%.

Upstart Holdings Inc.

Upstart Holdings is an AI lending platform that partners with banks to expand access to affordable credit. UPST operates through three segments: Personal Lending, Auto Lending, and Other. Its platform includes personal loans, automotive retail and refinance loans, home equity lines of credit and small-dollar loans.

The extensive application of AI is the core of UPST’s operations, especially through its advanced credit risk models. Upstart Holdings’ AI platform enables it to approve more applications than traditional credit score-based lending models at a lower annual percentage rate (APR).
UPST’s AI-driven innovative business model expanded its product offerings reducing human intervention. This enables faster and more efficient loan processing for borrowers with robust fraud detection capabilities. 

Upstart Holdings has an expected revenue and earnings growth rate of 59.3% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% in the past 30 days.

Huge Short-Term Upside Potential for UPST Stock

The short-term average price target of brokerage firms for the stock represents an increase of 61.5% from the last closing price of $49.66. The brokerage target price is currently in the range of $15-$108. This indicates a maximum upside of 117.5% and a downside of 69.8%.

Netflix Inc.

Netflix — the global streaming giant — uses AI, data science and machine language (ML) extensively to provide consumers with more appropriate and intuitive suggestions. NFLX maintained healthy engagement levels in fourth-quarter 2024, with about two hours of viewing per member per day, indicating strong member retention.   

Netflix's AI platform takes into account an individual’s viewing habits and hobbies and accordingly provides recommendations. NFLX’s AI model compiles subscriber information and recommends content based on their preferences, which can be customized by end users. AI applications enable NFLX to offer high-quality streaming service at reduced bandwidths.  

At the end of 2024, Netflix had 301.63 million paid subscribers across more than 190 countries, up 15.9% year over year. With this gigantic subscriber base, NFLX is likely to stay ahead of its rivals.

Netflix has an expected revenue and earnings growth rate of 14% and 24%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4% in the past 60 days. Moreover, NFLX currently has an ROE of 38.32%, compared with the industry’s ROE of a mere 0.19% and the S&P 500’s ROE of 17.11%.

Excellent Short-Term Upside Potential for NFLX Shares

The short-term average price target of brokerage firms for the stock represents an increase of 20% from the last closing price of $919.68. The brokerage target price is currently in the range of $800-$1,494. This indicates a maximum upside of 62.4% and a downside of 13%. 

Johnson Controls International plc

Johnson Controls International is thriving on solid momentum in the Building Solutions North America segment aided by an increase in demand for the HVAC platform. Strength in control, security and industrial refrigeration businesses bodes well for the Building Solutions EMEA/LA segment. 

Investments in digital offerings, like the OpenBlue platform is benefiting JCI. Strength across JCI’s longer-cycle businesses is expected to drive its growth. In November 2024, JCI expanded the AI capabilities of its OpenBlue Enterprise Manager Suite.

The expanded generative AI features take data insights to the next level with more autonomous building control that customers will experience utilizing OpenBlue. This will pave the way for JCI to enhance its AI platform further in 2025.

JCI’s AI-powered OpenBlue Enterprise Manager enables facility improvements, equipment upgrades and proactive services. As a result, customers will benefit from up to 30% reduction in energy spend, up to 20% reduction in maintenance spend, and 10% more optimized space utilization.

Johnson Controls International has an expected revenue and earnings growth rate of -11.9% and -1.9%, respectively, for the current year (ending September 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.6% in the past 30 days. Moreover, JCI has a current dividend yield of 1.92%. 

Attractive Short-Term Upside Potential for JCI Stock

The short-term average price target of brokerage firms for the stock represents an increase of 23.4% from the last closing price of $78.68. The brokerage target price is currently in the range of $79-$105. This indicates a maximum upside of 33.5% and no downside.

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Visa Inc. (V) : Free Stock Analysis Report

Netflix, Inc. (NFLX) : Free Stock Analysis Report

Johnson Controls International plc (JCI) : Free Stock Analysis Report

PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report

Upstart Holdings, Inc. (UPST) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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