In 2024, companies poured money into Artificial Intelligence infrastructure in a bid to outpace each other in the AI race. The communication services and information technology sectors led the the large-cap stocks in terms of returns. AI-driven hype was so significant that for the first time since 1998, the S&P’s large-cap index registered two consecutive years of 20%+ gains.
2025 may well be the year of reckoning for AI. Some analysts have questioned the massive AI spending throughout the last year. Their concerns and predictions were dealt a reality check though when Bill Gates‘ tech giant announced it planned to spend $80 billion on AI in fiscal 2025. Consequently, semiconductor stocks rallied, reminding everyone that the AI rally wasn’t over by any means.
We now look at the top 10 hottest stocks for 2025. Not surprisingly, the list is dominated by chipmakers, who we believe will be critical to the market’s returns this year. To come up with the 10 hottest mega-cap stocks of 2025, we considered stocks with at least $75 billion market capitalization.
10. ASML Holding N.V. (NASDAQ:ASML)
Shares of ASML Holdings have been steadily inching up so far this year, despite the stock facing multiple headwinds. It recently received a setback when a class action lawsuit brought by The Gross Law Firm alleged the company had misled investors on the state of the semiconductor industry and consumer demand.
The company also faces export control threats from the US. The China-US rivalry has meant that the company cannot simply sell its latest technology to China. China has bought the company’s deep ultraviolet (DUV) lithography machines in the past. However, the sale of the most advanced extreme ultraviolet (EUV) machines continues to be restricted.
Lithography machines are just like high-quality printers, but they use light to create extremely small patterns on silicon wafers, which become an integral part of modern chips. Despite export restrictions and legal troubles, the company will stay relevant in 2025 as its lithography machines benefit from US investments in the sector, especially in light of the CHIPS ACT.
The stock has received consistent downgrades in the last 3 months, though there is reason to believe that after being down 36% from its all-time highs, the stock is ripe for reversal.
9. Spotify Technology S.A. (NYSE:SPOT)
Spotify would usually make the news for exclusive content deals with artists or competition from other streaming services. But the company kicked off the new year by announcing a new partner program for content creators.
Like many other companies, Spotify is poised to benefit from improving AI technologies. With a low-cost business model, the company is able to spend on AI implementation to improve its offerings. The platform has done a good job improving user engagement and with AI-driven programmatic advertisement tools, it has been able to monetize this user engagement really well. This also helps the company continue to operate with high margins.
Spotify also holds considerable pricing power, something that is going to be a driver of growth heading into 2025. The firm recently hiked prices in over 60 markets, comfortably increasing its average revenue per user (ARPU) by 8.5%. At the same time, it was also able to minimize the loss of customers, proving it can easily improve its cashflows through price increases, if needed.