We recently compiled a list of the 10 Stocks Set to Explode in 2025. In this article, we are going to take a look at where Semtech Corporation (NASDAQ:SMTC) stands against the other stocks set to explode in 2025.
“Big Technology are The New Defensives” Strategist Says
As the Magnificent Seven continues to release earnings for the fiscal third quarter of 2024, investors are keen to see if the group can maintain their market leading position and exemplary performance. On October 25, Nancy Tengler, Laffer Tengler Investments CEO & Chief Investment Officer, appeared in an interview on Yahoo Finance to share her market thesis on big tech amid current market conditions.
Tengler suggests that names in big technology boast reliable earnings growth, fitting the basic criteria of such. She adds that she would much rather own big tech names than invest in traditional defensive stocks despite a sluggish economic backdrop. Tengler reiterates her bullish stance on the sector claiming that big technology names are the new defensive and hold much stronger positions in the market.
READ ALSO: 10 Oversold Tech Stocks To Buy Right Now and 8 Unstoppable Stocks That Could Make You Richer.
She emphasized that these names have large cash flow reserves, oftentimes, bigger than most countries. Tengler highlights that she is not bullish on all of the names in the magnificent seven and stresses that she has expanded her exposure to the tech sector, adding new stocks to her portfolio. However, at the same time, there are several names within the magnificent seven that cannot be ignored or argued against. She also suggests that investors must seek to invest and own a select few among the group, instead of owning all of them.
She shares that she was previously pessimistic about certain names she held and emphasized that she will focus on margins for certain stocks among the Mag Seven moving forward. Tengler also adds that while these companies have been criticized for pouring billions into capital expenditures, certain names are expected to benefit immensely from AI monetization and their unique cloud services and products.
While many characteristics define exploding stocks, some key traits involve an expanding customer base, improving monetization of offerings, increasing cash flows, and strong fundamentals. Biotech, electric vehicles, artificial intelligence, and cloud are among the few high-growth markets expected to blow up in the coming years. Within these sectors, certain names have been performing exceptionally well in the current market rally and are expected to outperform in 2025.
Our Methodology
To come up with 10 stocks set to explode in 2025, we consulted financial media to shortlist stocks that are expected to perform exceptionally well according to analysts and strategists. After consulting 10 similar rankings on the internet we examined the Street-High upside for each stock and picked the ones with the highest upside, as of October 27, 2024. Our list is in ascending order of the street high upside as of October 27, 2024. We have also mentioned the hedge fund sentiment for each stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Semtech Corporation (NASDAQ:SMTC)
Street High Upside as of October 27, 2024: 76%
Number of Hedge Fund Holders: 37
Semtech Corporation (NASDAQ:SMTC) ranks sixth on our list of stocks set to explode in 2025. The company is based in California and is engaged in the provision of high-performance semiconductors, IoT systems, and cloud connectivity services.
In the fiscal second quarter of 2025, Semtech Corporation (NASDAQ:SMTC) logged revenue worth $215.4 million, up from $206.1 million during the fiscal first quarter of 2025. The company has been expanding its offerings, explaining why it ranks on our list. In the past two months alone, the company has accelerated its 5G advanced infrastructure, explored scalable paths for 6G, eased broadband deployments, and enhanced its overall offerings.
For the fiscal third quarter of 2025, the company expects net sales to reach $233 million. The growth is projected to be driven by the infrastructure market and demand for data centers. In addition to that, its high-end consumer segment is expected to grow, due to typical seasonality. Lastly, its industrial end market is projected to grow slightly, as recovery gains from FQ2 2025 are expected to be passed on.
Semtech’s (NASDAQ:SMTC) strategic initiatives coupled with its financial standing promise growth in 2025 and beyond. Analysts are bullish on the stock and their high price target implies an upside of 76% from current levels. At the close of Q2 2024, 37 hedge funds were long on the stock, according to our Insider Monkey database.
Overall, SMTC ranks 6th among the 10 stocks set to explode in 2025. While we acknowledge the potential of SMTC as an investment, 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 SMTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.