Two Promising Nasdaq Stocks to Consider for 2025

The Nasdaq Composite index had an impressive year in 2024, achieving a remarkable gain of nearly 31%. This performance is largely attributed to the index's tech-focused composition, as several technology companies reported significant growth, driven in part by advances in artificial intelligence (AI).

Importantly, the strong performance of the Nasdaq in 2024 followed a notable 43% increase in 2023. Historical data suggests that after a year of over 30% gains, the Nasdaq tends to produce average returns of about 19% the following year, presenting a positive outlook for technology investors.

While past results are not a guaranteed predictor of future performance, favorable conditions—such as robust U.S. economic growth, moderate inflation, and increasing consumer spending due to higher real incomes—could further boost stock prices in 2025. Additionally, the rising use of AI across various sectors is expected to continue benefiting tech stocks going forward.

This brings us to consider two particular Nasdaq stocks that have the potential for significant gains in the coming year and beyond.

Marvell Technology: Growth Powered by Custom AI Chips

Marvell Technology (MRVL) delivered exceptional returns of 83% for its investors in 2024. The stock saw a significant uptick in the latter half of the year as the company established itself as a key player in the AI chip market.

Marvell specializes in custom processors, known as application-specific integrated circuits (ASICs), which are utilized in data centers for specific tasks. These chips have been increasingly adopted by major cloud providers for AI model training and inference, allowing them to reduce dependency on Nvidia and lower their AI development costs.

For example, Amazon has stated that its Trainium 2 custom AI processor can outperform Nvidia's chips while enabling clients to train specific models at a reduced cost of 40%. Notably, these custom AI chips are designed by Marvell, highlighting a strengthening partnership between the two companies.

During its recent earnings call, Marvell's management announced an expansion of their strategic collaboration with Amazon Web Services, formalizing a multi-generational five-year agreement. This agreement covers a wide range of Marvell's data center semiconductors, including custom AI products, which is expected to significantly boost business volume between the companies.

Marvell has numerous customers for its AI chips, explaining the rapid growth of its AI division. The company anticipates generating $1.5 billion in sales of AI chips in the current fiscal year, which concludes this month, followed by expectations of at least $2.5 billion in the upcoming fiscal year.

Marvell's production of custom AI chips is set to increase, and analysts predict a substantial 77% rise in earnings per share to $2.76 in the next fiscal year, following a modest 3% growth this year. This promising earnings growth bodes well for Marvell's stock performance in 2025 and underscores its long-term potential in the custom AI chip market.

Meta Platforms: Capturing More Digital Ad Revenue

Meta Platforms (META) also performed well in 2024, achieving gains of 65%. Despite last year's surge, the stock can still be purchased at an appealing valuation of 28 times trailing earnings and 24 times forward earnings. Investing in Meta is attractive as digital advertising spending is projected to grow nearly 8% in 2025, reaching just under $799 billion.

Meta has been successfully increasing its share in this growing market, with company revenue rising by 22% to $116.1 billion in the first three quarters of 2024. Its fourth-quarter revenue guidance of $46.5 billion suggests a total of approximately $162.6 billion for the year, marking a 20.5% increase from 2023. Analysts expect Meta's revenue to continue growing at double-digit rates in 2025 and 2026, indicating it could outpace the overall digital ad market growth.

Meta's ability to capture a larger share of advertising budgets is no surprise given its massive daily user base of 3.29 billion across its apps. This extensive reach allows advertisers to connect with vast audiences effectively. Consequently, Meta has seen a 7% increase in ad impressions year over year and an 11% rise in average ad prices in Q3 2024.

The deployment of AI has significantly enhanced Meta's advertising revenue strategies, enabling advertisers to refine audience targeting and maximize their advertising investments through improved returns. The potential expansion of AI in digital marketing presents a $1.78 trillion revenue opportunity by 2033, indicating that Meta could be poised for substantial growth.

In summary, Meta Platforms appears to be a strong candidate for investment, with promising prospects for both 2025 and the long term. Analysts forecast a 12% rise in earnings this year to $25.42 per share. If achieved, and if the stock trades at 27 times forward earnings next year—consistent with the Nasdaq-100 index's forward-earnings multiple—its stock price could ascend to $689, representing a 14% increase from current levels. Given its attractive valuation, investing in Meta now could prove beneficial as the company continues to grow.

Nasdaq, Stocks, AI