Technology may have been Wall Street’s hottest sector in 2024. Rapid growth in emerging industries such as artificial intelligence (AI) has fueled a massive rally, making this year one of the best for tech stocks in recent memory. Now it’s time to turn the page to 2025.
But try not to think about it too much; winners often continue to achieve success. Below is why each of them should continue to deliver fantastic returns for your portfolio.
Broadcom’s fiscal 2024 revenue totaled $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. Late last year it acquired VMware for $69 billion, and the additional revenue allowed Broadcom to grow its software business by 181% by 2024. The company’s revenues are now split roughly 60-40 between semiconductors and software.
Semiconductor revenues exceeded $30 billion in 2024, but grew only 7% from last year. However, artificial intelligence has become 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 dedicated AI chip for Apple‘s data center servers.
It sets the table for great things to come. These are early-stage opportunities for Broadcom, which grew its AI revenue 220% to $12.1 billion in 2024. The AI-driven hypergrowth Nvidia has enjoyed, seems to be showing up in Broadcom’s activities. That bodes well for the share, which trades at 29 times 2025 earnings expectations. This is a solid buy level for a company that analysts expect will grow earnings by 20% over the long term.
Broadcom was a star in 2024, and its strong business results and development of AI capabilities could continue to reward investors in 2025 and beyond.
Will Healy (Qualcomm): At first glance, Qualcomm stock does not appear to be a winning stock. It has struggled since the summer as 5G-driven growth ran its course. Additionally, Apple plans to launch a competing smartphone chipset in 2027, likely ending its relationship with Qualcomm.
Such a move would likely reduce the benefits it would experience from an AI upgrade cycle. In fiscal 2024, the handset segment, which houses the smartphone chipset business, accounted for 64% of the company’s revenue, meaning the loss of Apple’s business hits its biggest revenue source.
However, Qualcomm has long been preparing for the day when there is less demand for its chipsets. To this end, it has diversified into IoT and automotive, and the automotive-related segment has seen particular success. Although total sales grew just 9% in fiscal 2024 (ending September 29), auto revenues rose 55%.
Additionally, Qualcomm released PC chips earlier this year. The Snapdragon X Elite chips are faster than Apple’s M2 chip in some ways. Also going by the rumors that it wants to acquire some or all of it Intel If true, its influence in the chip industry could increase if such a buyout occurs.
Despite these concerns, the semiconductor stock is up 20% over the past year, even after falling more than 30% from its June high. That decline has pushed Qualcomm’s price-to-earnings ratio to 18, far below its rivals in the chip industry.
Admittedly, Qualcomm’s trajectory is somewhat uncertain as the company prepares for a likely loss of Apple’s business and invests more heavily in new market niches. But as the company builds on growth in automotive, PC and other businesses, investors may want to buy some Qualcomm stock while its earnings multiple is still low.
Jake Lerch (metaplatforms): Meta has been a market-beating stock for quite some time. Since its debut as a publicly traded company back in 2012, Meta’s stock generated a compound annual growth rate (CAGR) of 24.8%. That is almost double the yield of the S&P500which has generated a CAGR of 15.2% during the same period. In fact, Meta’s outperformance has become even more apparent recently. As of this writing, Meta stock is up 75% this year, compared to a 28% full-year return for the S&P 500.
But it is not alone Meta’s track record should make it attractive to investors as we head into 2025. What I like about the stock is its cash-generating power.
Over the past twelve months, Meta generated $156 billion in revenue, making it the 22nd largest U.S. company by revenue (having just crossed the mark). Home Depot earlier this year). But what really stands out to me is how much free cash flow Meta is generating. Over the past twelve months, Meta has generated over $52 billion in free cash flow.
Simply put, Meta is a high-margin company that has a stream of cash to return value to shareholders in a variety of ways, including rbuy shares, preducing debts, making sstrategic acquisitions, and/or ppaying dividends. Indeed, Meta announced a $50 billion stock buyback plan in February, along with a first-ever quarterly dividend.
Investors who are If you’re looking for a stock that will beat the market for the long term, you should consider Meta.
Consider the following before buying shares in Broadcom:
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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Jake Lerch has positions at Nvidia. Justin Pope has no position in any of the stocks mentioned. Will Healy has positions in Intel and Qualcomm. The Motley Fool holds 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 a disclosure policy.
3 Market-Slapping Tech Stocks to Boost Your Portfolio in 2025 and Beyond Originally published by The Motley Fool
