Technology has arguably been the hottest sector on Wall Street in 2024. The rapid growth of emerging industries, such as artificial intelligence (AI), has fueled a massive rally, making this year one of the best for stocks technologies of recent times. Now is the time to turn the page towards 2025.
But try not to think about it too much; winners often continue to be successful. Here’s why each should continue to generate fantastic 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. It acquired VMware for $69 billion late last year, and incremental revenue helped Broadcom grow its software business by 181% in 2024. The company’s revenue is now split roughly 60% 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 interesting 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 AppleThe data center servers.
Set the table for great things ahead. These are early-stage opportunities for Broadcom, which grew its AI revenue by 220% in 2024 to $12.1 billion. AI-driven hypergrowth NVIDIA has enjoyed seems to be starting to appear in Broadcom’s business. That bodes well for the stock, which trades at 29 times 2025 earnings estimates. That’s a solid buy level for a company that analysts predict will rack up earnings at a 20% growth rate over the long term. term.
Broadcom was a star in 2024, and its strong business results and development of AI opportunities could continue to reward investors in 2025 and beyond.
Will Healy (Qualcomm): Qualcomm stock doesn’t look like a winner at first glance. It has struggled since the summer as its 5G-fueled growth continues. 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 you would get from an AI refresh cycle. In fiscal 2024, its mobile phone 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 source of revenue. .
However, Qualcomm has long prepared for the day when its chipsets will be less in demand. To this end, it has diversified into IoT and automotive, and its automotive-related segment has seen particular success. Although its overall revenue grew just 9% in fiscal 2024 (which ended September 29), automotive revenue grew 55%.
Additionally, Qualcomm launched PC chips earlier this year. Its Snapdragon X Elite chips are faster than Apple’s M2 chip in some aspects. Furthermore, assuming rumors that it wants to acquire part or all of Intel If true, its influence in the chip industry could increase if such a purchase occurs.
Despite these concerns, semiconductor stocks have risen 20% over the past year, even after falling more than 30% from their June peak. That decline has brought Qualcomm’s P/E ratio to 18, well below its competitors in the chip industry.
Admittedly, Qualcomm’s path is somewhat uncertain as it prepares for a possible loss of Apple’s business and invests more in new market niches. Still, as it capitalizes on its growth in automotive, PC and other businesses, investors may want to buy some Qualcomm shares while its earnings multiple is still low.
Jake Lerch (Metaplatforms): Meta has been a leading stock in the market for some time now. Since its debut as a public company back In 2012, Meta shares generated a compound annual growth rate (CAGR) of 24.8%. That’s almost double the return of the S&P 500which has generated a CAGR of 15.2% over the same period. More specifically, Meta’s outperformance has been even more evident recently. As of this writing, Meta shares are up 75% year-to-date, compared to a 28% year-to-date return for the S&P 500.
However, it is not only Meta’s track record should make it attractive to investors as we approach 2025. What I love about stocks is their cash generating power.
In the past 12 months, Meta generated $156 billion in revenue, making it the 22nd largest U.S. company by revenue (just behind house deposit earlier this year). But what really catches my attention is the amount of free cash flow that Meta generates. In the last 12 months, Meta has accumulated 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 profitability.buyback of shares, preduce debt, make sstrategic acquisitions, and/opdistribute dividends. In fact, Meta announced a $50 billion share buyback plan in February, along with a first quarterly dividend.
Investors who are they If you’re looking for a stock that will outperform the market over the long term, you should consider Meta.
Before you buy Broadcom stock, consider this:
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, 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 at Intel and Qualcomm. The Motley Fool ranks and recommends Apple, Home Depot, Intel, Meta Platforms, Nvidia, and Qualcomm. The Motley Fool recommends Broadcom and recommends the following picks: Short February 2025 calls for $27 on Intel. The Motley Fool has a disclosure policy.
3 Tech Stocks That Will Beat the Market to Power Your Portfolio in 2025 and Beyond was originally published by The Motley Fool
