The global technology sector is on track for strong earnings growth in 2025, driven by advancements in artificial intelligence (AI), cloud computing, and semiconductors. Despite macroeconomic uncertainties, tech companies have demonstrated resilience, leveraging innovation to sustain revenue and profit expansion. Analysts anticipate substantial earnings growth across the sector, reflecting solid fundamentals and continued investment in transformative technologies.
According to a December 2024 report by John Butters, Vice President and Senior Earnings Analyst at FactSet, earnings for the S&P 500 are expected to grow by approximately 15% in 2025, with the information technology (IT) sector playing a crucial role in this expansion. Notably, all eleven sectors of the S&P 500 are projected to see year-over-year earnings growth, with six—including IT—expected to achieve double-digit increases. The report also emphasizes an interesting shift which is occurring outside of the “Magnificent 7,” the group of mega-cap tech companies that have historically driven market performance. While analysts forecast a 21% earnings growth for the Magnificent 7 in 2025, they also predict a significant improvement in earnings for the other 493 companies in the S&P 500, projecting a 13% increase. This represents a considerable jump from the mere 4% earnings growth expected for these same companies in 2024, signaling broader market participation in 2025.
Shifting Investor Focus Beyond Mega-Cap Tech
Although the Magnificent 7 continue to dominate the market, investor sentiment suggests a growing shift toward smaller, high-growth tech firms. Gene Munster, Managing Partner at Deepwater Asset Management, highlighted in a recent CNBC interview that while large-cap tech remains fundamentally strong, smaller companies within the “frontier tech” sector—typically valued below $500 billion—are poised to outperform over the next few years. This shift stems from concerns that trillion-dollar companies may have limited potential for high-percentage gains, prompting investors to explore smaller opportunities in AI, cloud infrastructure, and semiconductor equipment manufacturing.
A report from Deloitte’s 2025 Technology Industry Outlook reinforces the growth trajectory of the sector. Despite economic headwinds, technology investments are expected to accelerate, with increased spending on AI, cybersecurity, and enterprise software. Cybersecurity will be a critical focus as the digital attack surface expands due to the rise of IoT, generative AI, and cloud adoption. The global cost of cybercrime is projected to reach a staggering $10.5 trillion in 2025, emphasizing the need for heightened security investments.
Conclusion
As the technology sector heads into 2025, robust earnings growth is expected to continue, supported by AI-driven innovations and expanding digital transformation initiatives. The massive capital expenditures recently announced by major tech companies reflect confidence in the sector’s long-term potential. However, while mega-cap tech remains a dominant force, investor focus may increasingly shift toward smaller, high-growth companies that are pioneering next-generation technologies.
With this in mind, let us take a closer look at the 15 most promising technology stocks to buy according to analysts.
A Wall Street trading desk monitoring the performance of large-cap growth stocks.
Our Methodology
To determine the 15 most promising technology stocks, we began by analyzing all U.S.-listed tech companies with a market capitalization of at least $2 billion. To exclude unprofitable companies, we considered only companies that reported a positive net profit margin over the trailing twelve months period. From this refined list, we further narrowed our selection to those stocks with a potential upside of more than 10%. Finally, we ranked the companies in ascending order based on the number of hedge funds holding stakes in the respective company, with the company attracting the most hedge fund interest securing the top spot.
Note: All pricing data is as of market close on February 17.
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15 Most Promising Technology Stocks to Buy Now
15. Clear Secure Inc. (NYSE:YOU)
Number of Hedge Funds: 25
Potential Upside: 35%
Clear Secure Inc. (NYSE:YOU) offers a secure identity verification platform that primarily focuses on enhancing the travel experience for consumers. The company employs top-tier biometric capture technology to streamline the identification process at airports and other venues, allowing users to bypass traditional security lines.
Clear Secure Inc. (NYSE:YOU) has established a significant physical presence both in the US and globally. Its services are designed to improve efficiency and security for both travelers and businesses, with applications extending beyond travel to include sports and entertainment venues. The company’s growth strategy aims to capitalize on the increasing demand for expedited security solutions in the travel and event sectors. By forming partnerships with major airlines and venues, the company has built a solid foundation for growth, and its subscription-based model offers potential for recurring revenue.
In its Q3 2024 results, Clear Secure Inc. (NYSE:YOU) reported strong growth trends, with Total Cumulative Platform Uses reaching 220.4 million (+32% year-over-year), driven primarily by CLEAR Plus verifications and an increasing contribution from CLEAR Verified. Consequently, total revenue for the quarter grew 23.7% to $198.4 million, and total bookings rose by 18.7%. In her shareholder letter for the third quarter, the company’s CEO, Caryn Seidman Becker, expressed optimism about its outlook for 2025 and said:
“Looking ahead to 2025, we are excited by the multi-faceted growth opportunities across our secure identity network as we continue to drive bookings, expand margins, and accelerate free cash flow. With a strong foundation in place and a clear vision for the future, CLEAR is well-positioned to continue delivering value for our members, partners, and shareholders.”
14. Parsons Corp. (NYSE:PSN)
Number of Hedge Funds: 30
Potential Upside: 49%
Parsons Corp. (NYSE:PSN) is a technology-driven defense, intelligence, and critical infrastructure protection solutions provider. Specializing in cybersecurity, space systems, missile defense, and transportation infrastructure, Parsons supports US and other government agencies and commercial clients worldwide.
Parsons Corp. (NYSE:PSN) offers a diversified portfolio that positions it well to capitalize on increased government spending in its end-markets. The company’s strategic acquisitions and investments in cybersecurity, missile defense, and space operations have expanded its capabilities, enabling it to secure significant contracts and strengthen its market position. The company’s focus on integrating advanced technologies, such as artificial intelligence and machine learning, into its service offerings is expected to drive growth and enhance profitability.
On February 18, William Blair analyst upgraded Parsons Corp. (NYSE:PSN) to Outperform from Market Perform, without providing a specific price target, in anticipation of the company’s earnings report on February 19. Despite concerns that Parsons’ large confidential customer contract may pose a revenue headwind this year due to Executive Orders 14163 and 14169 (Orders signed on January 20 by Trump administration), the firm believes this headwind is now largely priced into the stock, given its 23% decline since their January downgrade and Parsons’s extension announcement.
13. Payoneer Global Inc. (NASDAQ:PAYO)
Number of Hedge Funds: 30
Potential Upside: 23%
Payoneer Global Inc. (NASDAQ:PAYO) is a leading financial technology company providing cross-border payment and financial services solutions. The company enables small and medium-sized businesses, exporters, and online sellers to access global demand and supply, pay and get paid, and manage their cross border and other needs from a single platform. The company’s platform offers digital banking, working capital, and payment processing services, catering to e-commerce, digital marketing, and international trade.
Payoneer Global Inc. (NASDAQ:PAYO) is well-positioned to capitalize on the rapid expansion of the digital economy and the growing demand for seamless international payment solutions. Its vast network and diverse suite of financial services enable businesses worldwide to conduct cross-border transactions with ease. By continuously innovating and introducing new financial products, the company is expected to attract a wider customer base and drive sustained revenue growth. Its ability to simplify global transactions and minimize friction in international payments has solidified its role as a key player in the evolving digital payments landscape.
On February 3, Deutsche Bank initiated coverage on Payoneer Global Inc. (NASDAQ:PAYO) with a Buy rating and a price target of $13. The analyst’s investment thesis highlighted Payoneer’s comprehensive financial infrastructure, which is designed to streamline cross-border transactions for small businesses globally. According to the analyst, Payoneer operates at the intersection of several key fintech trends, offering services that create significant growth opportunities. Deutsche Bank also anticipates that the company could see an acceleration in core revenue growth beyond fiscal 2025.
12. ACI Worldwide Inc. (NASDAQ:ACIW)
Number of Hedge Funds: 31
Potential Upside: 26%
ACI Worldwide Inc. (NASDAQ:ACIW) is a global provider of real-time electronic payment and banking solutions. The company offers a comprehensive suite of transformative software solutions and cloud-based services that power digital payments, fraud prevention, and transaction processing for banks, merchants, and billers.
November 2024 ‘Scamscope’ report by ACI Worldwide Inc. (NASDAQ:ACIW) and GlobalData, a leading data and analytics company, projected authorized push payment (APP) scam losses to reach $7.6 billion by 2028. Building on its technology expertise, on February 6, ACI Worldwide Inc. (NASDAQ:ACIW) announced the extension of its fintech partnership ecosystem through an alliance with Banfico, a leading fintech, to fight APP frauds in Europe and the UK. Through the partnership with Banfico, ACI will support UK and European banks and payment service providers (PSP) to comply with mandates to offer Confirmation of Payee (CoP) and Verification of Payee (VOP) services.
This partnership also demonstrates that ACI Worldwide Inc. (NASDAQ:ACIW)’s robust product portfolio and commitment to innovation positions it well to capitalize on the growing demand for secure and efficient payment processing solutions. The company’s strategic partnerships and continuous investment in technology are expected to enhance its competitive advantage and drive long-term growth.
11. Rambus Inc. (NASDAQ:RMBS)
Number of Hedge Funds: 34
Potential Upside: 13%
Rambus Inc. (NASDAQ:RMBS) is a semiconductor and technology solutions company specializing in high-performance memory, security, and interface solutions. The company develops advanced memory architectures, cryptographic security products, and chip-to-chip interface technologies used in data centers, AI workloads, and high-performance computing. Rambus collaborates with major semiconductor manufacturers and cloud service providers to enhance data security and processing efficiency.
Rambus Inc. (NASDAQ:RMBS) develops cutting-edge products and innovations that provide the enhanced bandwidth, capacity, and security needed to support the next generation of data center architectures and improve end-user experiences. Ensuring fast and secure data transmission within and between systems remains a critical design challenge that impacts the performance of advanced hardware. With extensive expertise in the semiconductor interconnect technology, Rambus Inc. (NASDAQ:RMBS) is uniquely positioned to tackle this challenge, leveraging its industry leadership to optimize data movement and protection, and thus supporting its investment case.
On February 4, Susquehanna analyst raised the price target on Rambus Inc. (NASDAQ:RMBS) to $70 from $66 and maintained a Positive rating on it. The analyst envisaged better earnings growth opportunity driven by diversification of DDR5 Dual Inline Memory Module (DIMM) buffer chip portfolio, incremental contribution from companion chips, and higher IP content with HBM4 than HBM3/HBM3e.
10. Cognex Corp. (NASDAQ:CGNX)
Number of Hedge Funds: 34
Potential Upside: 27%
Cognex Corp. (NASDAQ:CGNX) is a global provider of machine vision products and solutions that improve efficiency and quality in high-growth potential businesses across attractive industrial end markets. Machine vision products are used to automate the manufacturing or distribution and tracking of discrete items, such as mobile phones, electric vehicle batteries and e-commerce packages, by locating, identifying, inspecting, and measuring them. Its solutions blend physical products and software to capture and analyze visual information, allowing for the automation of manufacturing and distribution tasks for customers worldwide.
Cognex Corp. (NASDAQ:CGNX) reported its Q4 2024 results on February 12. Quarterly revenue increased by 17% year-over-year (YoY) to $230 million, with the acquisition of Moritex contributing around 5% of this growth. Adjusted EBITDA came in at $42 million with an 18.5% margin reflecting a 580 basis point YoY improvement. Net income per diluted share was $0.2, an 84% YoY increase. For Q1 2025, the company guided for revenue to be between $200 million and $220 million, with a projected adjusted EBITDA margin of 12%-15%. Management expects momentum to continue in logistics and semi, automotive to remain weak, and other factory automation growth to be relatively in line with macro indicators such as PMI.
As a result of the slightly softer guidance, Needham analyst has reduced his price target on Cognex Corp. (NASDAQ:CGNX) to $41 from $47 earlier, but maintained his Buy rating. Street has been focusing on the Q1 2025’s guidance and is concerned about the slowdown inthe automotive end-market. The automotive sector is the company’s second-largest end-market and declined around 14% over the full year of 2024. However, Logistics end-market grew 20% supported by demand from global e-commerce leaders as well as regional e-commerce, retail and parcel, and post providers. Growth in this end-market is expected to offset some of the pressure in automotive. Moreover, strict cost discipline should continue to support earnings.
9. Itron Inc. (NASDAQ:ITRI)
Number of Hedge Funds: 37
Potential Upside: 34%
Itron Inc. (NASDAQ:ITRI) specializes in energy and water resource management solutions for utilities and cities worldwide. The company offers a comprehensive portfolio of products and services, including smart meters, network communication technologies, and advanced data analytics software. These solutions enable customers to efficiently manage energy and water usage, enhance operational efficiency, and promote sustainability initiatives.
On February 11, Itron Inc. (NASDAQ:ITRI) announced its collaboration with Publiacqua, the primary water supplier for 1.3 million residents in Tuscany, Italy, to upgrade the region’s water distribution network. This modernization effort leverages Itron’s Ultrasonic Intelis water meters, which feature advanced leak detection capabilities to enhance data accuracy and reliability. Through this initiative, Itron continues to drive the global shift toward smart grids and intelligent urban infrastructure, addressing the increasing need for sustainable resource management and improved operational efficiency.
In its most recent update (November 2024), Roth MKM raised its price target for Itron Inc. (NASDAQ:ITRI)’s shares from $125 to $130 while maintaining its rating. The analyst cited Itron Inc. (NASDAQ:ITRI)’s strong backlog visibility as a key advantage, particularly as the company stands to benefit from forthcoming infrastructure investments. According to the analyst, these investments serve as favourable market drivers that could fuel growth, even amid potential short-term fluctuations in project timelines. Additionally, its counter-cyclical positioning was highlighted as a strength, offering resilience in the face of economic and political uncertainties. The company’s stability in volatile conditions makes it an appealing investment option. Both TD Cowen and Canaccord Genuity also reaffirmed their Buy ratings on Itron Inc. (NASDAQ:ITRI) in their respective reports in November.
8. Seagate Technology Holdings plc (NASDAQ:STX)
Number of Hedge Funds: 46
Potential Upside: 23%
Seagate Technology Holdings plc (NASDAQ:STX) is a prominent provider of data storage solutions, specializing in the design, manufacturing, and distribution of hard disk drives (HDDs) and solid-state drives (SSDs). Their products serve a wide array of applications, ranging from personal storage and computing to enterprise data centers and cloud storage infrastructures.
The exponential growth in data generation, driven by cloud computing, artificial intelligence, big data analytics, and edge computing, fuels the demand for Seagate Technology Holdings plc (NASDAQ:STX)’s high-capacity storage products. The company’s dedication to heat-assisted magnetic recording (HAMR) technology aims to deliver higher storage densities, addressing the evolving needs of data centers and enterprise customers.
In a move to advance its HAMR technology, Seagate Technology Holdings plc (NASDAQ:STX) announced its acquisition of Intevac Inc. (NASDAQ:IVAC) on February 13, in an all-cash transaction valued at $119 million. Intevac Inc. (NASDAQ:IVAC)’s 200 Lean platform holds a significant market share in HDD deposition equipment and is highly favorable for HAMR business growth. Viewing the acquisition positively, TD Cowen analyst maintained a Buy rating (as of February 14) on Seagate Technology Holdings plc (NASDAQ:STX) with an unchanged price target of $135.00. The analyst believes this deal will enhance the company’s supply chain capabilities and prepare for the HAMR ramp-up. Despite the potential increase in operational expenses by approximately $30 million annually, Seagate is positioned to partially offset these costs, reinforcing the positive outlook on their stock.
7. KLA Corporation (NASDAQ:KLAC)
Number of Hedge Funds: 61
Potential Upside: 13%
KLA Corp. (NASDAQ:KLAC) is a prominent supplier of process control and yield management systems for the semiconductor industry. The company’s comprehensive portfolio includes inspection, metrology, and data analysis solutions that assist semiconductor manufacturers in achieving optimal productivity and high-quality output.
KLA Corp. (NASDAQ:KLAC)’s cutting-edge technologies play a crucial role in the manufacturing of integrated circuits and other microelectronics, ensuring high precision and efficiency in semiconductor production. On January 31, Goldman Sachs raised its price target on the shares to $864 while reaffirming a Buy rating. This adjustment was driven by the company’s strong financial performance and optimistic outlook, highlighted by a 97% return on equity and two decades of consistent dividend payments. Morgan Stanley also revised its outlook on KLA Corporation (NASDAQ:KLAC), lifting its price target from $703 to $748 while maintaining an Equal-Weight rating. The firm acknowledged potential market softening, particularly in the Dynamic Random Access Memory (DRAM) segment, but noted that the company may be better positioned than its competitors. Morgan Stanley attributed this resilience to KLA Corp. (NASDAQ:KLAC)’s strong presence in advanced logic, as well as its ability to leverage longer lead times and higher margins, which could help mitigate the impact of market fluctuations.
6. Western Digital Corporation (NASDAQ:WDC)
Number of Hedge Funds: 66
Potential Upside: 18%
Western Digital Corp. (NASDAQ:WDC) is a leading developer and manufacturer of data storage devices and solutions. The company’s product lineup encompasses hard disk drives (HDDs), solid-state drives (SSDs), and external storage systems designed for both consumer and enterprise markets. Western Digital’s storage solutions are utilized in a variety of applications, including personal computing, data centers, and cloud storage services, addressing the growing global need for reliable and high-capacity data storage.
Western Digital Corp. (NASDAQ:WDC) hosted its Investor Day on February 12, outlining its growth potential amid increasing storage demand. The company projects that installed cloud storage will expand at a 23% compound annual growth rate (CAGR) between 2024 and 2028, reaching 19.2 zettabytes. Management estimates the total addressable market for nearline hard disk drives (HDDs) at $22.6 billion, with $5.5 billion driven by AI-related demand.
Reflecting the optimistic outlook presented at the event, an analyst at Cantor Fitzgerald reaffirmed an Overweight rating on Western Digital Corp. (NASDAQ:WDC) with an unchanged price target of $95. The analyst pointed to SanDisk’s latest financial model and quarterly guidance, as well as anticipated supply shortages expected by the fourth quarter of 2025. Additionally, they emphasized the potential value unlocked by the planned separation of the company’s NAND business, arguing that the current valuation does not fully account for the worth of the NAND segment. Notably, the company has officially spun off its flash business, creating two independent, publicly traded entities, with the newly formed company operating as SanDisk Corp. (NASDAQ:SNDKV).
5. Arista Networks Inc (NYSE:ANET)
Number of Hedge Funds: 70
Potential Upside: 12%
Arista Networks Inc (NYSE:ANET) provides data-driven, client-to-cloud networking for large data centers, campus, and routing environments. Arista’s platforms deliver availability, agility, automation, analytics, and security through an advanced network operating stack. The company’s offerings are mainly focused on high-speed data center and cloud networking systems, value-add software-defined network solutions, and advanced routing systems for edge routing and data center interconnect (DCI).
The investment case for Arista Networks Inc (NYSE:ANET) is bolstered by its expansive and innovatively evolving product line, a diversified customer base ranging from hyperscalers to government agencies, and a burgeoning addressable market. The company primarily competes in the high-speed data center Ethernet switching markets for 10 Gigabit Ethernet (“GbE”) and above. Supported by rapid growth, it has achieved a leadership position in high-speed Ethernet port shipments of 100G and above and holds the second-largest market share in overall data center Ethernet switch ports and revenue. Arista Networks stands to benefit from the rising demand for digital transformation, AI, increasing hybrid workloads, and Zero Trust Networking Security.
In a testament to its strong positioning, an analyst from Piper Sandler, on January 23, quoted Arista as the most discussed “winner” of Project Stargate among his coverage of stocks due to its substantial exposure to hyperscalers and AI vendors. He estimates Arista Networks Inc (NYSE:ANET) to capture more than 30% share of high-end data center switching, which implies a serviceable available market (SAM) of over $6 billion over five years, or $1.25 billion annually. This makes Arista Networks Inc (NYSE:ANET) a compelling opportunity in the data center space. On February 14th, a Barclays analyst reiterated his Buy rating on Arista Networks Inc. (NYSE:ANET) with a price target of $125.
4. Micron Technology Inc. (NASDAQ:MU)
Number of Hedge Funds: 107
Potential Upside: 26%
Micron Technology Inc. (NASDAQ:MU) designs, develops, manufactures, and markets memory and storage products, including dynamic random-access memory (DRAM), flash memory (NAND), solid-state drives (SSDs), and High Bandwidth Memory (HBM) globally. The company is well-positioned to capitalize on technological advancements in AI, 5G, autonomous vehicles, and data centers.
Micron Technology Inc. (NASDAQ:MU)’s HBM chips are particularly designed to handle data-intensive workloads in data center servers, AI applications, and high-performance computing. The company has positioned its HBM products as a key growth driver, anticipating the total addressable market (TAM) for HBM to expand fourfold by 2028, from $16 billion in 2024 to over $100 billion by 2030. The company’s management has reported significant traction for HBM chips, with HBM revenue doubling sequentially in its latest quarter. Buoyed by this success, Micron Technology Inc. (NASDAQ:MU) has announced a $7.0 billion investment in a new HBM advanced packaging facility, to be located adjacent to its existing facilities in Singapore and expected to be operational by 2026.
On February 13, a Citi analyst reaffirmed his Buy rating on Micron Technology Inc. (NASDAQ:MU) shares with a target price of $150, despite the company’s recent guidance indicating a sequential decline in gross margin by a few hundred points. The analyst had initially anticipated a slight sequential increase. Although the fiscal Q3 gross margin forecast was lowered from 40% to 35% and described as “disappointing,” the analyst maintains a positive outlook on Micron Technology Inc. (NASDAQ:MU), citing the potential for high bandwidth memory in artificial intelligence and a belief that the DRAM market will rebound in the spring.
3. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Funds: 107
Potential Upside: 24%
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor company that designs and manufactures high-performance computing and graphics solutions. Its product portfolio includes microprocessors, graphics processors, and system-on-chip (SoC) solutions for various applications, including data centers, gaming, and embedded systems. It has gained significant market share in the CPU and GPU markets, competing directly with Intel Corp. (NASDAQ:INTC) and NVIDIA Corp. (NASDAQ:NVDA).
Advanced Micro Devices, Inc. (NASDAQ:AMD)’s innovative architecture and focus on energy efficiency have established it as a key player in the rapidly evolving semiconductor industry. It is well-positioned to capitalize on the growing demand for high-performance computing, driven by trends such as artificial intelligence, machine learning, and cloud computing. That being said, there were news reports recently of Arm Holdings Plc. (NASDAQ:ARM)’s plan of launching its own chips this year after securing Meta Platforms (NASDAQ:META) as one of its first customers. If these reports hold water, competition will intensify further for both Advanced Micro Devices Inc. (NASDAQ:AMD) and Intel Corp. (NASDAQ:INTC).
In the first week of January, Northland Capital Markets analyst Gus Richard named Advanced Micro Devices Inc. (NASDAQ:AMD) among his Top Picks for 2025. He estimates the company’s AI revenue to reach $9.5 billion in 2025, up from $5.2 billion, with revenue in the first half of 2025 expected to rise 7% compared to the second half of 2024. He provides a positive rationale, stating:
“We expect AMD to continue to gain share in AI GPUs, server CPUs, and PC clients as headwinds from the embedded and gaming segments abate. AMD is winning share in AI based on its roadmap and TCO. AMD has better products for server and client CPUs. The PC refresh cycle will likely be much stronger than currently expected. We think there is significantly more upside to CY 2025 than risks.”
In a February 5 update, a Stifel analyst maintained his Buy rating on Advanced Micro Devices Inc. (NASDAQ:AMD) but lowered his target price to $162 from $200 earlier, still indicating 43% upside.
2. Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM)
Number of Hedge Funds: 158
Potential Upside: 26%
Taiwan Semiconductor Manufacturing Company (NYSE:TSM) is the world’s largest and most advanced semiconductor foundry. As opposed to the integrated device manufacturers (IDMs) such as Intel, TSMC operates exclusively as a pure-play foundry, and does not design its own chips but focuses on high-performance semiconductor fabrication. It plays a crucial role in the global technology supply chain by manufacturing chips for major companies, including Apple, NVIDIA, AMD, and Qualcomm.
With its deep technological prowess, Taiwan Semiconductor Manufacturing Company (NYSE:TSM) generally finds itself at the center of the news flow related to semiconductor manufacturing. On February 15, Bloomberg reported that the company is considering acquiring Intel Corp. (NASDAQ:INTC)’s U.S. manufacturing facilities. This development comes after officials from the Trump administration proposed the idea to Taiwan Semiconductor Manufacturing Company (NYSE:TSM) to bolster American manufacturing capabilities. However, another report from Reuters suggests that some officials suggest that the administration has expressed reservations about a foreign entity operating Intel Corp. (NASDAQ:INTC)’s U.S. factory. These discussions are in preliminary stages, and no formal agreements have been reached. Similar speculation of Intel’s breakup into parts and spin-offs has also been doing the rounds amid which Intel’s share price has rallied 24% in one week.
Taiwan Semiconductor Manufacturing Company (NYSE:TSM) leads in process technology, being the first to mass-produce 3nm chips and investing heavily in 2nm and beyond. As demand for AI, high-performance computing (HPC), and advanced mobile processors grows, TSMC is well-positioned to capitalize on the industry’s shift to smaller, more efficient, and more powerful chips. The company is a consensus buy with an upside potential of around 26%. On January 17, Barclays raised their price target to $255 from $240 and reiterated their Overweight rating on the shares basing their positive view on expected growth from AI.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Funds: 193
Potential Upside: 26%
NVIDIA Corp. (NASDAQ:NVDA) designs and manufactures graphics processing units (GPUs), system on a chip units (SoCs), and AI hardware and software. Over the years, the company has expanded its offerings from gaming GPUs to include data center solutions, AI computing, and deep learning technologies. The company’s GPUs are widely used in data centers for high-performance computing, AI training, and inference, making it a critical player in the data center ecosystem. Its products are essential for powering advanced applications in AI, machine learning, and data analytics. NVIDIA Corp. (NASDAQ:NVDA) boasts the best margin profile among the companies in this list.
NVIDIA Corp. (NASDAQ:NVDA) has transitioned from a PC gaming GPU company to a dominant player in the accelerated computing space, offering full-stack computing infrastructure with data-center-scale solutions. The company’s strength is evident in its commanding over 80% market share in GPUs. NVIDIA has greatly benefited from the growing adoption of AI and machine learning technologies, driving strong demand for its chips. The company’s revenue, profitability, and market capitalization have surged since the introduction of GenAI models like ChatGPT.
Despite recent concerns surrounding DeepSeek, analysts continue to view the stock as a consensus Buy, predicting an upside of approximately 24%. On January 28, Tigress Financial Partners upgraded the stock’s rating from Buy to Strong Buy and increased the price target from $170 to $220. According to Tigress Financial’s analysts, total capital investment in AI-driven and data center development is expected to surpass $330 billion in 2025, up from just under $250 billion in 2024. They also project that investments could potentially reach $400 billion by 2026. Given its robust positioning, NVIDIA Corp. (NASDAQ:NVDA) is poised to be a significant beneficiary of these investments and will continue to influence the future of AI and data center technology.
While we acknowledge the potential of NVDA to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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