2 Leading Tech Stocks to Buy in 2025

In the stock market, we often hear the phrase that a rising tide lifts all boats. However, the opposite is equally true: when the tide falls, all boats are lowered too. We can see this principle in action with the tech-heavy Nasdaq Composite (^IXIC), which has recently declined by over 9% in value this year. As this index has fallen, many well-known tech stocks have also seen drops in their prices. For example, Apple has dropped by 15%, Alphabet has also decreased by 15%, and Nvidia has lost 12% of its value in the same timeframe.

Despite these declines, a few notable stocks have managed to stand out from the crowd. This article will explore two of those stocks: Spotify Technology (SPOT) and Meta Platforms (META).

1. Spotify Technology

Starting with Spotify Technology, this leading audio streaming service has shown impressive resilience, rising 28% so far this year. This is a clear sign of relative strength, indicating that the stock is performing well, regardless of the overall market trends. Investors are particularly excited about Spotify’s rapid growth and its recent shift towards profitability.

Spotify has a strong history of growth, averaging about 18% quarterly revenue growth over the last five years. However, the most significant driver behind its recent stock price surge is its rising profitability. Like Netflix, Spotify has managed to turn previous net losses into solid profits by increasing prices and cutting costs.

To illustrate this turnaround, consider that Spotify recorded an annual diluted earnings per share (EPS) loss of $3.54 in 2021. By 2024, this scenario had changed dramatically, with a positive diluted EPS of $5.95.

2. Meta Platforms

Next, let’s look at Meta Platforms. Currently, its shares have remained mostly stable this year, which is rather unremarkable, especially when considering its past performance with gains exceeding 100% in some years. Nevertheless, this stability is quite an achievement compared to many other major stock indexes.

So, what strategies is Meta utilizing to stay strong in such a challenging environment? One of its biggest strengths is its vast user base. With over 3.3 billion daily active users on platforms like Facebook and Instagram, a large part of Meta's operations runs almost automatically. Every day, billions of users engage with the platform, allowing Meta to generate about $500 million in daily revenue from advertisers.

Moreover, Meta is excellent at converting this revenue into profits and free cash flow. For instance, during the last quarter of 2023, Meta reported:

• $48 billion in revenue
• $21 billion in net income
• $13 billion in free cash flow

This high level of sales, profits, and free cash flow provides a strong foundation for shareholder value, whether through stock buybacks, debt reduction, or dividend payments.

In conclusion, both Spotify and Meta Platforms showcase robust business models and strong financial performance, making them attractive options for investors looking towards 2025.

This analysis does not constitute financial advice and should be considered a personal opinion. Always do your own research before investing.

Stocks, Investing, Tech