These stocks remain high-quality picks even after the 2024 tech boom.
The American stock market posted a solid performance in 2024, with the benchmark index S&P500 showing a total return of around 25% as we approach the end of the year. Unsurprisingly, the technology sector, particularly stocks powered by artificial intelligence (AI), has been at the heart of this bull rally.
Market volatility increased somewhat in December 2024 due to the Federal Reserve’s indication of smaller-than-expected interest rate cuts in 2025. Despite these headwinds, there remain some high-quality stocks and fundamentally strong to watch in 2025.
In this context, these stocks may prove to be attractive choices for savvy investors in 2025. Here’s why.
Nvidia
Nvidia (NVDA -2.09%) has become a standout stock in 2024, demonstrating exceptional financial performance and technological prowess. It is indisputable that the company’s AI-optimized ecosystem (hardware, software, partners) has been at the heart of this spectacular growth trajectory.
Nvidia’s revenue jumped 94% year over year to $35.1 billion in its fiscal 2025 third quarter (ended Oct. 27), driven primarily by 112% growth. year-over-year growth in the AI-enabled data center segment.
The revenue growth trajectory could continue for several quarters, driven by staggering demand for Blackwell’s comprehensive, full-infrastructure, and highly customizable systems across the company’s AI data centers. The company has already shipped 13,000 samples of its next-generation Blackwell systems to customers including ChatGPT developer OpenAI.
Having dominated the AI training market, Nvidia is now expected to benefit significantly from the growing demand in the inference market (deploying complex AI models into the production environment) due to its large installed base and of its robust software ecosystem. The company has successfully transitioned its hardware chips and software from training to inference workloads, implying that existing customers won’t have to turn to the competition.
Nvidia’s enterprise AI software solutions are also increasingly adopted by leading companies such as Sales force, SAPAnd ServiceNow. All of these trends have helped to further entrench Nvidia’s moat. Given Nvidia’s various growth catalysts in the AI market and strong financial growth prospects, the company is well-positioned to generate strong returns in 2025.
Advanced microdevices
Being the second largest AI chip manufacturer in the world, Advanced microdevices (AMD 0.10%) is poised to benefit significantly from the rapidly expanding AI market (with an estimated target market of $500 billion by 2028).
The company’s data center revenue soared 122% year over year to $3.5 billion in the third quarter, driven primarily by strong adoption of its Instinct GPUs and EPYC server processors. AMD now expects data center GPU revenue to exceed $5 billion in 2024, an improved estimate from the previous forecast of $4.5 billion provided in July 2024. So although it is behind Nvidia, AMD is gradually expanding its presence in the AI market.
Microsoft uses AMD’s MI300X chips to power multiple co-pilot services. Metaplatforms also chose these chips to power its large-scale inference infrastructure, particularly for its most demanding open source Llama model. AMD is also focusing on improving performance to further drive adoption of its GPUs.
The recently launched MI325X GPUs demonstrated 20% better inference performance than the H200 chips. AMD is also preparing for the launch of the upcoming MI350 series GPUs, scheduled for the second half of 2025.
Looking ahead to 2025, analysts expect AMD’s revenue to be around $32.56 billion, implying year-over-year growth of 26. 88%. Additionally, the company is profitable and has positive free cash flow. Therefore, AMD could be an interesting stock to watch in 2025.
Alphabet
Alphabet (GOOG -1.55%) (GOOGL -1.45%) has become a formidable player in the AI space and is already making money from its AI offerings. Although the company faces numerous headwinds, including antitrust challenges and adverse decisions from the Justice Department (including a recent one requiring the divestiture of its Chrome browser and Android mobile operating system), the fundamentals from Alphabet are pretty solid.
Google is still the leader in the global search market with a share of 89.9%. Additionally, the company introduced AI search presentation capabilities in 100 new countries and territories that will reach more than 1 billion users each month.
This results in increased frequency and complexity of search queries, which means increased user engagement for the company’s search activity. Google search revenue grew 12% year over year to $49.4 billion and accounted for 57% of the company’s total revenue in the third quarter.
Google Cloud is also becoming a major catalyst, with revenue growing an impressive 35% year-over-year to $11.4 billion and operating profit up nearly 631% year-over-year to $1.9 billion. dollars in the third quarter. Robust adoption of AI infrastructure and generative AI technologies across industries and use cases has played a pivotal role in Google Cloud’s growth.
Therefore, Alphabet appears to be an attractive choice based on its leadership in the AI-based search market and its growth prospects in the cloud sector.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Advanced Micro Devices, Alphabet, Meta Platforms, Microsoft, Nvidia, Salesforce and ServiceNow. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
