Technology was arguably the hottest sector on Wall Street in 2024. Rapid growth in emerging industries, such as artificial intelligence (AI), has led to a massive rally, making this year one of the best for technology stocks in recent memory. Now it’s time to turn the page to 2025.
But try not to overthink it; Winners often go on to achieve success. Here’s an explanation of why each of them should continue to deliver great returns for your portfolio.
Broadcom’s fiscal 2024 revenue was $51.5 billion, up 44% from 2023. The company built its name on semiconductors, but Broadcom has expanded into enterprise software, including infrastructure and security. He – she Acquired VMware for $69 billion Late last year, the additional revenue helped Broadcom grow its software business 181% in 2024. The company’s revenue is now split about 60-40 between semiconductors and software.
Semiconductor revenue exceeded $30 billion in 2024 but grew only 7% from last year. However, AI is becoming an increasingly exciting growth opportunity. Broadcom began working with prominent AI developer OpenAI earlier this year, and recent reports indicate that Broadcom is developing a custom AI chip for appleData center servers.
It sets the table for big things to come. These are early opportunities for Broadcom, which increased its AI revenue 220% in 2024 to $12.1 billion. Artificial intelligence-based hypergrowth Nvidia And Broadcom appears to be making a comeback in its business. That bodes well for the stock, which trades at 29 times 2025 earnings estimates. This is a strong buy level for a company that analysts estimate will double earnings at a 20% growth rate over the long term.
Broadcom was a star in 2024, and its strong business results and AI development opportunities could continue to reward investors in 2025 and beyond.
Will Healy (Qualcomm): Qualcomm stock doesn’t look like a winning stock at first glance. It has struggled since the summer as its 5G-driven growth ran its course. Furthermore, Apple plans to launch competing smartphone chips in 2027, which would likely end its relationship with Qualcomm.
Such a move would likely reduce the benefits you would gain from the AI upgrade cycle. In fiscal year 2024, the phone segment, which includes the smartphone chip business, accounted for 64% of the company’s revenue, which means that the loss of Apple’s business affects its largest source of revenue.
However, Qualcomm has long prepared for the day when demand for its chips decreases. To this end, it has diversified its business into IoT and automotive, with its automotive sector seeing particular success. Although its overall revenue grew just 9% in fiscal 2024 (ending September 29), automotive revenue grew 55%.
In addition, Qualcomm released PC chips earlier this year. Its Snapdragon X Elite chipset is faster than Apple’s M2 chip in some ways. Likewise, assuming what was reported about its desire to acquire some or all of it Intel It is true that its influence in the chip industry could grow if such an acquisition occurs.
Despite these concerns, the semiconductor stock is up 20% over the past year, even after falling more than 30% from its June high. This decline brought Qualcomm’s P/E ratio to 18, which is much lower than its chipmaking competitors.
Admittedly, Qualcomm’s path is somewhat uncertain, as it braces for a potential loss of Apple’s business and invests more heavily in new market areas. However, since it relies on its growth in cars, computers and other businesses, investors may want to buy some Qualcomm stock while its earnings multiple is still low.
Jake Lerch (Introduction Platforms): Meta has been a market outperforming stock for some time now. Since its beginning as a public company behind In 2012, Meta’s shares achieved a compound annual growth rate (CAGR) of 24.8%. That’s nearly double the return Standard & Poor’s 500Which achieved a compound annual growth rate of 15.2% during the same period. More importantly, Meta’s outperformance has become more evident recently. As of this writing, Meta stock is up 75% year-to-date, versus a 28% annual return for the S&P 500.
However, it is Not only A meta track record should make it attractive to investors as we head into 2025. What I like about the stock is its ability to generate cash.
Over the past 12 months, Meta generated $156 billion in revenue, making it the 22nd largest U.S. company by revenue (having just surpassed… Home Depot earlier this year). But what really catches my attention is the amount of free cash flow Meta generates. Over the past 12 months, Meta generated more than $52 billion in free cash flow.
Simply put, Meta is a high-margin company that has a river of cash to return value to shareholders in a variety of ways, including research.Purchasing stocks, pPay off debts, making sStrategic acquisitions and/or pDividend distribution. In fact, Meta announced a $50 billion stock buyback plan in February, along with paying a quarterly dividend for the first time ever.
Investors Who are they? If you’re looking for a stock that will outperform the market over the long term, you should consider Meta.
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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jake Lerch He has positions at Nvidia. Justin Pope He has no position in any of the stocks mentioned. Will Healy He has positions at Intel and Qualcomm. The Motley Fool has positions in and recommends Apple, Home Depot, Intel, Meta Platforms, Nvidia, and Qualcomm. The Motley Fool recommends Broadcom and recommends the following options: Short February 2025 $27 calls on Intel. The Motley Fool has Disclosure policy.
3 tech stocks that are outperforming the market to boost your portfolio in 2025 and beyond Originally published by The Motley Fool
