With just a few weeks left in 2024, you may find yourself needing to rebalance your stock portfolio. Many investors take the time to review their investments toward the end of the year, often as part of their tax planning efforts. December can be a good time to capture capital gains and/or tax-deductible losses before the end of the tax year.
On that note, you may be looking for great growth stocks to buy in 2025 – and I’m here to help. Here are three of the most tempting buys in the tech sector today. Hold on to your hats, because I’m going to jump between some very different investment theses here.
What if you want to invest in the artificial intelligence (AI) boom, especially on the hardware side, but… Nvidia(NASDAQ: NVDA) looks too expensive? The leading provider of AI accelerator chips has been very kind to investors over the past two years, posting a total return of 687% as of December 11. Maybe it’s time to take a step back from this towering AI winner and consider some more affordable alternatives. .
I recommend taking a look at the old Nvidia rival Advanced micro devices(NASDAQ: AMD). This company is also deep in the AI wave, showing strong demand for its Instinct MI300 AI chips and looking forward to launching the next generation Instinct MI350 in 2025. Additionally, the company is already outlining designs for the Instinct MI400 series. .
As a result, AMD’s data center revenues are rising much faster than expected. Within that division, $2.3 billion worth of graphics processing units (GPU) were sold in 2023, as major customers snapped up AMD’s fastest AI accelerators by the truckload. At the time, management expected these products to generate about $3.5 billion in sales by 2024, but that’s now an old target. The latest forecast rose to more than $5 billion. This juggernaut is unstoppable, despite Nvidia and others doing their best to win every contract for AI training systems.
So AMD is a solid investment in AI hardware, but its shares aren’t rising like Nvidia’s. AMD shares have fallen 20% over the past six months and today trade at a fraction of Nvidia’s nosebleed-inducing price-to-sales ratio. You need to consider this Nvidia alternative before the market makers realize how promising this AI-powered growth story is.
Here’s another AI-focused idea that steps beyond hardware limitations. Good old International business machines(NYSE: IBM) recently beat both AMD and Nvidia, with a total return of 38% in six months. At the same time, Big Blue is barely beginning to reap the benefits of a strategy shift that began more than a decade ago. Demand for the company’s AI services at the enterprise level should skyrocket in the coming years.
IBM’s big and patient bet on AI is starting to pay off. And despite recent price gains, the stock is trading at just 3.4 times trailing revenue or 17 times free cash flow. It could double in price and still look affordable next to AMD, and soar much higher without challenging Nvidia’s valuation.
Long story short: IBM is the best choice for value investors in AI.
Let’s also look outside the AI market. Here, digital display technologist Universal view(NASDAQ: OLED) looks tempting after a 21% price drop in the last six months.
The company’s organic light-emitting diode (OLED) displays are always finding more real-world applications. The foldable phones you see today are possible thanks to the flexible nature of OLED screens. The technology is perfect for high-quality TV sets with perfect blacks and brilliant colors.
OLED screens are finally making their way into tablets and laptops, and luxury cars started integrating OLED technology into their dashboards years ago. According to recent Nikkei reports Apple will switch the last of its iPhone models from LCD to OLED screens next year.
In other words, OLED screens are popping up everywhere, and I haven’t even mentioned lighting panels yet. Remember that OLED technology is energy efficient and environmentally friendly and responds to the cost-saving and climate-conscious secular trends.
Universal Display doesn’t make any of these consumer-facing products, but collects a modest royalty from each OLED device that leaves a customer’s factory. The company also makes money by reselling the necessary OLED ingredients in a long-term partnership with a chemical giant PPG Industries. It’s a low-cost business model with juicy profit margins and great long-term growth prospects.
Still, the stock has been struggling lately, and you can buy Universal Display stock at the very reasonable valuation of 32 times earnings. I’ve been pounding the table over Universal Display for years, and it’s still one of my favorite purchases. You need to take a serious look at this continued growth story as you rebalance that nest egg.
Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.
On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Nvidia:If you had invested $1,000 when we doubled in 2009,you would have $348,112!*
Apple: If you had invested $1,000 when we doubled in 2008, you would have $46,992!*
Netflix: If you had invested $1,000 when we doubled in 2004, you would have $495,539!*
We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns December 9, 2024
Anders Bylund holds positions at International Business Machines, Nvidia and Universal Display. The Motley Fool holds positions in and recommends Advanced Micro Devices, Apple, and Nvidia. The Motley Fool recommends International Business Machines and Universal Display. The Motley Fool has a disclosure policy.
3 Top Tech Stocks to Buy Now was originally published by The Motley Fool
