3 Market-Beating Tech Stocks to Supercharge Your Portfolio in 2025 and Beyond

The technology sector had an exciting year in 2024. With strong fundamentals and impressive growth prospects, three leading tech stocks are set to maintain their momentum as we look towards 2025.

Technology was perhaps the most vibrant sector on Wall Street in 2024. The explosive growth in emerging fields, particularly artificial intelligence (AI), has sparked a significant rally. This year has proven to be one of the most successful for technology stocks in recent times, and now we transition into 2025.

Three analysts have identified Broadcom, Qualcomm, and Meta Platforms as stocks likely to shine in 2025 and beyond. Each of these companies has a track record of generating significant investment returns, which you might already be familiar with.

The rationale for each of these companies and their potential to keep delivering solid returns for your portfolio is outlined below.

Strong Finish for Broadcom in 2024 Sets Up Future Gains

Justin Pope (Broadcom): Broadcom is a company that looks promising as we head into 2025, even after a remarkable growth of over 95% since the start of the year. The semiconductor and software powerhouse recently concluded a successful fiscal year 2024, which hints at strong business prospects moving forward.

The revenue for Broadcom reached $51.5 billion in fiscal 2024, a notable 44% increase from the previous year. Originally focused on semiconductors, Broadcom has expanded into enterprise software, including infrastructure and security solutions. The acquisition of VMware for $69 billion last year has been a game-changer, resulting in a staggering 181% growth in its software business in 2024. Currently, revenue comes from semiconductors and software at a ratio of roughly 60-40.

While semiconductor revenue surpassed $30 billion in 2024, it only grew by 7% from the previous year. Nonetheless, there are exciting opportunities in AI. Earlier this year, Broadcom partnered with AI leader OpenAI, and reports suggest that it is working on a specialized AI chip for Apple’s data center servers.

This sets the stage for a prosperous future. Broadcom's AI revenue surged by 220% in 2024, reaching $12.1 billion. The phenomenal growth enjoyed by AI giants like Nvidia seems to be beginning to resonate within Broadcom as well. This bodes well for the stock, which trades at 29 times the earnings expected in 2025. Analysts predict a long-term earnings growth rate of around 20%, making this an attractive buying opportunity.

Broadcom was a standout player in 2024, and its robust business performance alongside its growing AI initiatives could keep benefiting investors well into 2025.

Qualcomm's Diversification is Key to Future Growth

Will Healy (Qualcomm): At first glance, Qualcomm might not seem like a winning stock. The company has faced challenges since summer as its growth driven by 5G technology begins to level off. Additionally, Apple plans to introduce its own smartphone chip by 2027, which could potentially sever its ties with Qualcomm.

This move would likely limit Qualcomm's gains from an upcoming AI-driven upgrade cycle. In fiscal 2024, the handset segment, representing Qualcomm's smartphone chip division, accounted for 64% of total revenues, making Apple's business loss a significant blow.

Despite these challenges, Qualcomm has long prepared for decreased demand for its chipsets. The company has successfully diversified into the Internet of Things (IoT) and the automotive sector, where it has seen substantial success. While overall revenue increased by only 9% in fiscal 2024, automotive revenue surged by 55%, showcasing its potential.

Moreover, Qualcomm introduced new PC chips this year. Its Snapdragon X Elite chips have outperformed Apple’s M2 chip in various aspects. There are also rumors suggesting that Qualcomm may want to acquire Intel, which could further enhance its standing in the semiconductor industry.

Even with these uncertainties, Qualcomm’s stock has risen by 20% over the past year, despite a dip of over 30% from its peak in June. This decline has brought Qualcomm's P/E ratio down to 18, making it more attractive compared to its industry competitors.

While Qualcomm's future remains a bit uncertain, especially with the anticipated loss of Apple's business, the focus on automotive, PC, and other market sectors could present a buying opportunity for investors at this relatively low earnings multiple.

Meta: A Stock Worth Watching for Investors

Jake Lerch (Meta Platforms): Meta has consistently been a strong performer in the market. Since its IPO in 2012, its shares have achieved a compound annual growth rate (CAGR) of 24.8%, nearly double the S&P 500's CAGR of 15.2% during the same timeframe. Recently, Meta's stock is up 75% year-to-date, while the S&P 500 is only up 28% in comparison.

Yet, it’s not just its historical performance that makes Meta appealing as we approach 2025. Its ability to generate cash is remarkable.

In the past year, Meta generated $156 billion in revenue, placing it as the 22nd largest company in the U.S. by revenue, just surpassing Home Depot. However, it’s Meta's substantial free cash flow that stands out—over the last 12 months, it has produced more than $52 billion in free cash flow.

This solid cash flow allows Meta to return value to shareholders in various ways, such as share buybacks, debt reduction, strategic acquisitions, or dividends. In February, the company announced a $50 billion share buyback plan and a first-ever quarterly dividend, highlighting its financial strength.

For long-term investors looking for a stock that consistently outperforms the market, Meta remains a prime candidate.

Note: Randi Zuckerberg is a former director at Facebook and sister to Meta Platforms CEO Mark Zuckerberg. Opinions expressed here are those of the individual authors and they do not reflect any external affiliations.

Technology, Investments, StockMarket