With just a couple of weeks left in 2024, you might find yourself rebalancing your stock portfolio. Many investors take the time to review their holdings near the end of the year, often as part of their tax planning efforts. December can be a great time to lock in capital gains and/or tax-deductible losses before the end of the tax year.
On that note, maybe you’re looking for great growth stocks to buy at the doorstep of 2025 — and I’m here to help you out. Here are three of the most tempting buys in the tech sector today. Hold on to your hat, because I’m going to jump between some very different investment theses here.
What if you want to invest in the artificial intelligence (AI) boom, specifically on the hardware side, but Nvidia(NASDAQ: NVDA) looks too expensive? The leading provider of AI accelerator chips has been very kind to investors over the last two years, posting a total return of 687% on Dec. 11. Maybe it’s time to take a step back from this skyrocketing AI winner and consider some more affordable alternatives.
I recommend taking a look at longtime Nvidia rival Advanced Micro Devices(NASDAQ: AMD). This company is also knee-deep in the AI surge, showing strong demand for its Instinct MI300 AI chips and looking forward to the next-generation Instinct MI350 launch in 2025. Beyond that, the company is already sketching up designs for the Instinct MI400 series.
As a result, AMD’s data center revenues are ramping up much faster than expected. Within that division, graphics processing units (GPU) saw $2.3 billion of sales in 2023 as large-scale customers snapped up AMD’s fastest AI accelerators by the truckload. Management expected these products to generate about $3.5 billion of 2024 sales at the time, but that’s an old target now. The latest projection rose to more than $5 billion. There’s no stopping this juggernaut, despite Nvidia and others trying hard to win every AI-training systems contract.
So AMD is a rock-solid AI hardware investment, but the stock isn’t soaring like Nvidia’s. AMD shares have fallen 20% in the last six months, and they trade at a fraction of Nvidia’s nosebleed-inducing price-to-sales ratio today. You should consider this Nvidia alternative before the market makers realize how promising this AI-powered growth story is.
Here’s another AI-focused idea that steps outside the hardware constraints. Good old International Business Machines(NYSE: IBM) has outgained both AMD and Nvidia recently, delivering a 38% total return in six months. At the same time, Big Blue has barely started to reap the benefits of a strategy shift that started more than a decade ago. The next few years should see soaring demand for the company’s enterprise-class AI services.
IBM’s big and patient bet on AI is starting to pay dividends. And despite its recent price gains, the stock trades at just 3.4 times trailing sales or 17 times free cash flows. It could double in price and still look affordable next to AMD, and soar much higher without challenging Nvidia’s valuation.
Long story short, IBM is the value investor’s best bet on the AI opportunity.
Let’s take a peek outside the AI market too. Here, digital display technologist Universal Display(NASDAQ: OLED) looks tempting after a 21% price drop in the last six months.
The company’s organic light-emitting diode (OLED) screens are always finding more real-world use cases. The foldable phones you see these days are possible thanks to the flexible nature of OLED screens. The technology is perfect for high-end TV sets with perfect blacks and brilliant colors.
OLED displays are finally finding their way into tablets and laptops, and luxury cars started putting OLED technology into their dashboards years ago. According to recent Nikkei reports, Apple will switch the last of its iPhone models from LCD to OLED screens next year.
In other words, OLED screens are popping up everywhere, and I haven’t even mentioned lighting panels yet. Don’t forget that OLED technology is energy-thrifty and environmentally friendly, tapping into the cost-saving and climate-conscious secular trends.
Universal Display doesn’t make any of these consumer-facing products, but collects a modest royalty from every OLED device leaving a customer’s factory. The company also makes money by reselling the required OLED ingredients in a long-term partnership with chemicals powerhouse PPG Industries. It’s a low-cost business model with juicy profit margins and stellar long-term growth prospects.
Yet the stock has struggled recently, and you can pick up Universal Display shares at the very reasonable valuation of 32 times earnings. I’ve been pounding the table about Universal Display for years, and it’s still one of my favorite buys. You should give this ongoing growth story a serious look as you rebalance that nest egg of yours.
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 $348,112!*
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,992!*
Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $495,539!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
Anders Bylund has positions in International Business Machines, Nvidia, and Universal Display. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, and Nvidia. The Motley Fool recommends International Business Machines and Universal Display. The Motley Fool has a disclosure policy.
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