2 Monster Stocks to Buy Before 2025

Source The Motley Fool

With 2024 coming to an end, many investors may be keen to readjust their investment portfolios to secure higher returns for 2025. Since artificial intelligence (AI) continues to be a red-hot investment theme on Wall Street, investors can consider purchasing small stakes in fundamentally strong, high-quality AI-powered stocks.

Against this backdrop, here's why stocks such as Nvidia (NASDAQ: NVDA) and Amazon (NASDAQ: AMZN) may prove to be attractive picks ahead of the new year.

Nvidia

Nvidia continued its run of stellar performance with its third quarter of fiscal 2025 (ended Oct. 27, 2024) earnings report, with revenues and earnings handily beating consensus estimates. Unsurprisingly, AI continues to be the most important growth catalyst for Nvidia, which positioned itself as a data center scale end-to-end AI infrastructure company.

Nvidia's Hopper architecture chips are still in high demand from cloud service providers, consumer internet companies, and enterprises building and running next-generation AI models. The recently launched H200 GPU (successor to the widely acclaimed H100 GPU) saw sales rising to double-digit billions in the third quarter, becoming the fastest product ramp-up in the company's history.

Nvidia's next-generation Blackwell architecture GPUs are also seeing strong momentum, with 13,000 GPU samples already shipped to customers. With demand for Blackwell GPUs far outpacing supply for several upcoming quarters, Nvidia will enjoy significant pricing power -- especially since its chips are technologically superior to its competitors. Subsequently, the company expects to exceed its previous Blackwell revenue outlook of several billion dollars for fiscal 2025.

Going beyond AI-optimized chips, Nvidia is already witnessing solid adoption of its cloud-native Enterprise AI software suite, which includes a range of microservices for generative AI development, application deployment across environments, and technology support. Many industry leaders are using the Enterprise AI platform as an operating platform of choice for building AI agents and CoPilots. Enterprise AI can emerge as a major growth driver for Nvidia in the coming years, as billions of agents are expected be deployed.

Furthermore, Nvidia also expects Industrial AI and robotics to become potent growth opportunities. With enterprises keen on designing and simulating complex physical environments to increase productivity and efficiency, Nvidia Omniverse (a real-time 3D collaboration and simulation platform) stands to benefit dramatically in the coming years.

While Nvidia's technological prowess is undeniable, many investors seemed to be spooked by its high valuation multiples. However, the company's robust growth prospects seem to justify its valuation. Nvidia is currently trading at price-to-earnings (P/E) multiple of 54.4 times, far lower than its five-year average P/E multiple of 75.7 times. The company's price/earnings-to-growth (PEG) ratio of 0.24 times is also far lower than 1.

Hence, considering the solid AI-powered tailwinds and robust financial health, I believe that Nvidia can be a smart pick for long-term investors.

Amazon

Amazon also surpassed top-line and bottom-line expectations in its third quarter 2024 (ending Sept. 30, 2024) results. While the company showed broad-based growth across all businesses, Amazon Web Services (AWS) and advertising segments outshined the rest.

As the leading global cloud infrastructure player with 31% market share, AWS continues to benefit from companies modernizing their IT infrastructure and moving from on-premise environment to the cloud. The cloud computing business is also a beneficiary of the increasing enterprise adoption of generative AI technologies at scale. Generative AI technologies have a higher probability of being more successful and competitive if the enterprise data is in the cloud. Furthermore, to attract customers, AWS released almost twice the number of generative AI and machine learning features as compared to competitors in the past 18 months.

AWS revenues grew by 19.1% from a year ago to $27.5 billion in the third quarter. The cloud computing business's operating income grew by $3.5 billion to $10.4 billion. AWS has reached an annualized revenue run rate of $110 billion, with significant reacceleration in the last four quarters. AWS' AI business is growing even faster and has already reached a multibillion-dollar revenue run rate. It is growing at a triple-digit year-over-year percentage, almost three times faster than AWS in its early growth stages.

Advertising revenues grew 18.8% year over year to $14.3 billion in the third quarter. The business is also proving a major contributor to the company's overall profitability. Thanks to Amazon's expansive reach across products, services, geographies, and demographics, the company has been successful in offering full-funnel advertising services at scale. Amazon engages with and measures outcomes for customers at every stage of the purchase journey, making it an attractive advertising platform for all types of brands. It has also launched several generative AI-powered creative tools to help advertisers design and create engaging and relevant advertisements.

Amazon's Sponsored Products advertisements on its e-commerce platform have continued to show meaningful growth. Furthermore, the company is also generating a new revenue stream with advertising on Prime Video.

With a strong financial backdrop, ongoing leadership in cloud computing, advancements in AI, and increasing strength in digital advertising, Amazon positioned for strong gains in 2025.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $358,460!*
  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,946!*
  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $478,249!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 25, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, 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 has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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