The technology sector had a blast in 2024. Thanks to solid fundamentals and red-hot growth opportunities, these three prominent tech stocks are poised to continue the fun.
Technology will undoubtedly be the hottest sector on Wall Street in 2024, with rapid growth in emerging industries such as artificial intelligence (AI) fueling massive stock gains, making this year the best for tech stocks in recent memory. It was the year of Now it's time to turn the page to 2025.
After doing some homework, three Motley Fool contributors determined that: broadcom (AVGO 24.43%), Qualcomm (QCOM 0.18%)and meta platform (meta -1.65%) Because stocks are poised for big wins in 2025 and beyond. You may already be familiar with all three stocks, as they all have a history of generating strong investment returns.
But don't overthink it. Winners often continue to be successful. Below is a pitch for why each should continue to provide great returns to your portfolio.
Broadcom ends 2024 on a high note, paving the way for further profits
Justin Pope (Broadcom): It's hard not to like Broadcom heading into 2025, even after the stock has soared more than 95% since January. The semiconductor and enterprise software company recently ended its fiscal year 2024. This is an important year that shows strong momentum for the business heading into next year.
Broadcom's fiscal year 2024 revenue totaled $51.5 billion, an increase of 44% from 2023. Although the company built its name on semiconductors, Broadcom has expanded into enterprise software, including infrastructure and security. Broadcom's $69 billion acquisition of VMware late last year helped Broadcom grow its software business by 181% in 2024. The company's revenue is currently split approximately 60/40 between semiconductors and software.
Semiconductor sales will exceed $30 billion in 2024, but only grew by 7% compared to the previous year. However, artificial intelligence 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 purpose-built AI chips, including: appledata center server.
It prepares you for big things to come. These are early-stage opportunities for Broadcom, which saw AI revenue grow 220% to $12.1 billion in 2024. AI-driven hyper growth Nvidia It appears that the benefits of this are beginning to appear in Broadcom's business. That bodes well for the company's stock, which trades at 29 times expected 2025 earnings. This is a solid buy level for a company that analysts expect to grow earnings at a 20% rate over the long term.
Broadcom is a star in 2024, and its strong performance and AI development opportunities could continue to benefit investors in 2025 and beyond.
Diversification could be key to this stock recovery
Will Healy (Qualcomm): At first glance, Qualcomm stock doesn't look like a winning stock. It has been struggling since the summer, even as 5G-led growth has run 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 gained from the AI upgrade cycle. In fiscal 2024, Apple's mobile phone division, including its smartphone chipset business, will account for 64% of the company's overall revenue, so any business losses for Apple will affect its largest source of revenue.
But Qualcomm has long been preparing for the day when demand for its chipsets will drop. To achieve this objective, the company has diversified its business into IoT and automotive, with the automotive division being particularly successful. While overall revenue grew by only 9% in fiscal 2024 (ending September 29), automotive segment revenue increased by 55%.
Additionally, Qualcomm released a PC chip earlier this year. The company's Snapdragon X Elite chip is faster than Apple's M2 chip in several ways. There are also rumors that they would like to acquire some or all of intel That's true, but such an acquisition could increase the company's influence in the chip industry.
Despite these concerns, semiconductor stocks are up 20% from last year, despite falling more than 30% from June highs. The decline pushed Qualcomm's P/E ratio to 18x, significantly lower than its chip industry competitors.
To be sure, Qualcomm's path is somewhat uncertain as it braces for Apple's business losses and ramps up investments in new niche markets. Still, investors may want to buy Qualcomm stock while its earnings multiple is still low, as the company is experiencing growth in its auto, PC and other businesses.
Meta is a stock that allows investors to beat the market. must not be overlooked
Jake Larch (Metaplatform): Meta is a stock that has been beating the market for some time. Since debut as a listed company return In 2012, Meta's stock generated a compound annual growth rate (CAGR) of 24.8%. This is almost double the return of S&P500generated a CAGR of 15.2% over the same period. What's more, the meta's outperformance has become even more evident recently. As of this writing, Meta stock is up 75% year-to-date, compared to a 28% year-to-date return for the S&P 500.
However, that Not just Meta's track record should be attractive to investors heading into 2025. What I like about this stock is its ability to generate cash.
Over the past 12 months, Meta has generated $156 billion in revenue, making it the 22nd largest U.S. company by revenue (just home depot early this year). But what really catches my eye is how much free cash flow Meta is generating. Over the past 12 months, Meta's free cash flow exceeded $52 billion.
Simply put, Meta is a highly profitable business with lots of cash to return value to shareholders in a variety of ways.Purchase of shares, preduce debt, earn moneystrategic acquisitions, and/orpaying dividends. In fact, Meta announced a $50 billion share buyback plan in February along with its first-ever quarterly dividend.
investor Who are you? If you're looking for stocks that will beat the market over the long term, you should consider the meta.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. Jake Lerch has a position at Nvidia. Justin Pope has no position in any stocks mentioned. Will Healy holds 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: February 2025 $27 short calls on Intel. The Motley Fool has a disclosure policy.
