As traditional sectors experienced lagging recovery after the great financial crisis of 2008, investors increasingly turned to big tech — an industry that had matured and expanded significantly after the dot com crash at the turn of the millennium.
These investors were rewarded with outsized returns — and big tech has continued to dominate the investing landscape since. As we draw closer to the mid-point of the decade, the influence of big tech on society at large has never been stronger — and with the artificial intelligence revolution in full swing, it appears as if that influence will only grow in coming years.
Maintaining a trajectory of rapid growth, having already risen to such high valuations, is a tall order indeed — but several of tech’s biggest players are gearing up for another year of impressive returns.
Picks for you
Nvidia (NASDAQ: NVDA)
It comes as little surprise that Nvidia (NASDAQ: NVDA) is the first entry on our list. Over the course of 2024, Nvidia stock has seen gains of 189.96% and is currently trading at $139.67 per share.
As the leading designer and producer of high-end graphics processing units (GPUs), Nvidia is probably the business that is best positioned to benefit from the ongoing artificial intelligence boom. While worries persist that this is, in fact, a bubble, most major tech companies have clearly stated their intentions to keep AI spending at a high level in 2025.
In addition, the company is widely expected to enter the CPU market in 2025, with a total addressable market (TAM) of roughly $35 billion, a move that would serve to provide much-needed diversification when it comes to revenue streams.
While it has become increasingly difficult for the Jensen Huang-led semiconductor venture to impress its investors, dips like the one seen after the release of the company’s Q3 FY2025 earnings report can provide an attractive entry point for a long-term position.
Alphabet (NASDAQ: GOOGL)
The parent company of Google, Alphabet (NASDAQ: GOOGL) has an unavoidable footprint in the digital realm. It wouldn’t be an overstatement to say that, for most people, using the Internet is synonymous with Google.
Our second entry is, like Nvidia, poised to benefit from 2024’s dominant narrative in the coming year — artificial intelligence. Google’s core businesses — advertising, cloud services, and software tools stand to see accelerating revenues from improved targeting and the benefits that automation can bring in terms of efficiency. At press time, Google stock was trading at $194.63, with year-to-date (YTD) returns of 40.86%.
One underappreciated facet of Google is just how diversified it has become — the company’s metaphorical fingers are now in many pots, from self-driving with Waymo, biotech and life extension with Calico, to good old cutting-edge tech research with DeepMind and the recent advancements that the tech titan has made in quantum computing.
Apple (NASDAQ: AAPL)
Apple (NASDAQ: AAPL) has had a long and storied road on its way to the company’s current dominant position. At present, Apple is the largest publicly traded company in the world — and one of the businesses in contention to be the first to reach a market capitalization of $4 trillion.
In 2024, Apple stock provided a 37.51% return and was trading at $255.27 at press time. While it notched many new all-time highs (ATHs) in 2024, Apple has several key advantages that could serve to propel prices even higher in 2025.
The business maintains a very diversified ecosystem — and as a newcomer to the AI race with its late October release of Apple Intelligence, the tech leader could very well be poised to take advantage of new revenue streams.
Last but not least, the most esteemed value investor in the world, Warren Buffett, still maintains a sizable position, although he has reduced his stake as of late — suggesting that while the business’s valuation might be becoming a tad too high for the famously cautious Buffett, the ratio of risk and reward remains appealing.
Honorable mention — a hypothetical Palantir stock dip
We would be remiss not to mention Palantir (NASDAQ: PLTR), a data analytics business that has long been the target of Wall Street’s skepticism.
Throughout 2024, that narrative has shifted after a series of outstanding earnings calls — now, institutional investors can’t seem to get ahold of enough Palantir stock, and worries surrounding the company’s overreliance on government contracts seem to have faded away.
Since the beginning of 2024, the price of a single PLTR share has gone from just $16.58 to $80.69 — equating to a 386.67% increase. As impressive as it is, Palantir stock already has a lot of growth valued in — the company’s trailing price-to-earnings (PE) ratio sits at 362x, while the forward PE is at a very high 154x.
In contrast, even Nvidia, with its enviable growth, maintains a forward PE ratio of 32 — a paltry figure when compared to Palantir. This means that the odds of a correction — and a steep one, at that, are quite high — and investors should consider at which valuation PLTR stock would align with their risk tolerance.
Featured image via Shutterstock
