2 Stocks Set to Dominate in 2025

Sometimes, it's fairly obvious which companies will have a successful year before we're actually in it. I think that's the case with two companies: Taiwan Semiconductor (NYSE: TSM) and Amazon (NASDAQ: AMZN) although others could certainly make the list, too. These two are primed for success heading into 2025, and I think the conditions are right to buy both stocks right now.

Taiwan Semiconductor

Taiwan Semiconductor is at the forefront of every major technological shift today. Without the chips that it fabricates for all of the major tech players, smartphones or any of the GPUs that make today's artificial intelligence (AI) models possible wouldn't be at the same level.

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Its cutting-edge 3-nanometer (nm) chips are still increasing in demand, but it's already working on getting the next generation of chips ready for launch. Its 2nm chips are set to debut in late 2025 and reach full-scale production in 2026. Management states that the pre-order demand for these chips is higher than what 3nm and 5nm chips saw, mainly due to the efficiency of these chips.

When configured to produce the same speed as 3nm chips, 2nm chips consume 25% to 30% less energy, making them a huge factor in increasing battery life or saving money on energy costs.

This will set TSMC's stock up nicely throughout the year, as it has the tailwind of AI spending driving it in the middle of the year combined with the hype of a next-generation chip driving it at the end of the year. That is a recipe for a stock set to dominate in 2025, and analyst projections back that up. They expect 25% revenue growth in 2025, which is impressive for a company Taiwan Semi's size.

This does come at a slight cost, though. Taiwan Semiconductor's stock trades for 22 times 2025 earnings. That's a hefty price tag on the stock, but still cheaper than many companies that have far less potential than TSMC (such as Apple at 30 times 2025 earnings).

Taiwan Semiconductor is primed for a great 2025, and it still looks like a strong stock to be purchasing now.

Amazon

Amazon's 2025 isn't about its e-commerce side; it's about its cloud computing wing, Amazon Web Services (AWS). AWS is the largest cloud computing business, and it gained that advantage by being the first to market.

Cloud computing allows clients to run workloads on Amazon's servers, which is a cost-effective practice for clients that tend to scale usage up or down. It also allows its clients to be asset-light and not need to spend money on expensive computing equipment that can quickly go out of date.

Another huge use of cloud computing is using its powerful servers to train AI models. Not every company needs access to a supercomputer all the time, so renting out power from a cloud computing provider like AWS is a no-brainer.

AWS is also a huge part of Amazon's financial picture. Although it only made up 17% of Amazon's Q3 total revenue, it accounted for 60% of the operating profit. As a result, with AWS growing 19% year over year (much faster than the commerce side of its business), it will influence investors' opinions on the stock.

Furthermore, as AWS profits have started to become a larger chunk of the business, its gross profit margin has been rising.

AMZN Gross Profit Margin (Quarterly) data by YCharts

As a result, it has garnered a higher valuation than most commerce companies have and should be seen more as a tech stock than anything else. Still, Amazon trades at 37 times 2025 earnings, so it's far from a cheap stock. However, with the strength of its AWS platform and its commerce division improving profitability, this could still be a low price to pay for the stock if you have a long-term (more than five years) mindset.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keithen Drury has positions in Amazon and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Amazon, Apple, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.