Two Tech Companies Worth Investing in at the Moment
The tech world continued to shine in 2024, with the stock market flourishing, particularly in the technology sector. The widespread fascination with artificial intelligence (AI) persisted, fueling investors' hunger for outstanding returns. And yet, this bull run appears far from its conclusion.
While the stock market may take a brief pause over the coming months, tech-centric stocks remain promising prospects for 2025. These stocks can benefit from trends such as predictive AI, cloud computing, automation, digitization, cybersecurity, semiconductors, and other innovative technologies. However, investors must strategically invest in high-quality, fundamentally robust tech stocks. The following two firms stand out as smart bets:
Nvidia: Pushing AI-based computing beyond the horizon
Examining Nvidia's (NVDA 3.10%) product roadmap, financial performance, and latest advancements form a compelling case. As the undisputed leader in the discrete graphics processing unit (GPU) market, boasting a 90% market share, Nvidia's Hopper architecture GPUs retain high demand. In addition, the upcoming Blackwell architecture GPUs are anticipated to ignite demand among hyperscalers and outstrip supply.
Global GPU-powered machine learning-based computing is rapidly replacing traditional CPU-based computing in data centers worldwide, thanks to its growing popularity. CEO Jensen Huang predicts that at least $1 trillion worth of data centers will need an upgrade to accelerated computing by 2027. This significant growth opportunity bodes well for Nvidia. Furthermore, the company's Compute Unified Device Architecture (CUDA) software stack, which supports parallel programming of GPUs, is undeniably robust. With millions of developers using CUDA in over 3,000 applications, it serves as a powerful moat for Nvidia.
During CES 2025, Nvidia made several product announcements. The personal AI supercomputer, NVIDIA Project DIGITS, which utilizes the new NVIDIA GB10 Grace Blackwell superchip, is priced affordably at $3,000 each. It enables developers to run large language models (LLMs) with up to 200-billion parameters independently. Expanding AI supercomputing capabilities can foster substantial growth for Nvidia in the coming years.
Besides digital AI capabilities, Nvidia's physical AI advancements are commendable. The company has launched the Cosmos World foundation model platform, which aims to streamline the development, training, and deployment of physical AI solutions. As physical AI models are complicated, costly, and time-consuming to create, Cosmos plays a crucial role in enabling faster and more straightforward development for developers.
Nvidia's financial performance is equally impressive. Analysts expect the company's Q4 2025 revenues to reach approximately $38 billion, translating to a significant year-over-year increase of 72.1%. Earnings per share (EPS) are projected to soar to $0.85, marking an impressive year-over-year rise of 63%. Over the past year, Nvidia's shares have skyrocketed by an astounding 830%. Although the stock has already garnered recognition for its technological prowess, execution capabilities, and massive addressable market, the imminent growth potential hints at further share appreciation in the coming months.
Meta Platforms: AI models amplifying its digital ad business
Meta Platforms (META 0.24%) presents an attractive tech pick for 2025. First, Meta's robust digital ad business, driven by its Family of Apps (which includes popular social media platforms like Facebook, Instagram, Messenger, and WhatsApp), has demonstrated its strength and growth potential. Revenues surged 19% year over year to $40.6 billion in Q3 2024, with the apps accounting for 93% of total revenues.
Meta's commitment to leveraging AI for personalized recommendations and delivering better user experiences has driven higher engagements, with users spending 8% more time on Facebook and 6% more on Instagram. This improved user engagement has led to better ad pricing and higher ad impressions on its social media platforms.
Second, Meta is making remarkable strides in the AI space with its Large Concept Models (LCMs). These models demonstrate better performance than similar-sized LLMs, using discrete concepts for reasoning and planning. LCMs require fewer computation resources, leading to enhanced cost efficiency and productivity.
Meta has allocated $70.9 billion of its cash reserves to AI initiatives, demonstrating its unwavering dedication to innovative AI technologies. After releasing its Llama 3.2 LLM, Meta is currently training Llama 4 models on a cluster powered by over 100,000 Nvidia's H100 chips. The intention is to launch smaller Llama 4 models in early 2025. As the Llama models are open-source, Meta's investment in this area can prove a significant advantage in the coming years.
Lastly, despite its impressive business model and robust growth prospects, Meta is relatively undervalued, trading at a reasonable forward price-to-earnings (P/E) ratio of 23.9. Although mounting losses from Reality Labs and rising capital expenditure investments pose potential risks, Meta remains a shrewd investment choice for January 2025.
In light of the strong performance of the tech sector, strategically investing in high-quality tech stocks like Nvidia and Meta Platforms can yield significant returns in 2025. Nvidia, with its market-leading position in GPU technology and advancements in AI, is projected to continue its impressive revenue growth, driven by the demand for AI-based computing and upgrades in data centers. Meta Platforms, on the other hand, is leveraging AI to improve its digital ad business and invest heavily in AI initiatives, making it a promising pick for investors seeking exposure to the tech and AI sectors.
