The tech sector may be starting to get a bit frothy, but there are still individual names out there with valuations and expectations that are modest enough to be conducive to further upside through the year. Indeed, there’s no arguing against the magnitude of multiple expansion that some of the mega-cap tech innovators (especially those at the forefront of artificial intelligence (AI)) have experienced in recent months.
Either way, some tech plays could be tough to stop amid their ascendency, even if we are destined for a correction at some point this year, perhaps in the first half.
In this piece, we’ll check in on two interesting tech stocks that some analysts may be inclined to view as one of their top picks for the year. I’ll give my take so that you can better determine whether either stock would be worth tracking down or perhaps picking up as the month of January comes to a close.
Meta Platforms
Despite the explosive multi-year rally in shares of Facebook parent Meta Platforms (NASDAQ:META | META Price Prediction), some of the most bullish big-league analysts on Wall Street don’t seem to be changing their tune for 2025. In fact, Jefferies, a notable bull, praised Meta stock as its top AI pick for the year.
Meta is spending heavily on AI. But as someone wise once put it, you’ve got to spend money to make money. Either way, Jefferies’ Brent Thill has no worries (at least compared to most investors) about the company’s hefty AI spending plans. Thill sees Meta as achieving “strong returns from these investments.”
Given Meta’s track record on AI thus far, I think it’s hard to argue against the potential for an attractive return on AI investments. Indeed, if there were a gold medal for AI monetization, it’d have to go to Zuckerberg and the company.
While there are bound to be some margin pressures ahead, I wouldn’t make too much of the matter, especially before the company has a chance to clear the air with its full-year guide to be revealed after its coming fourth-quarter reveal due for January 29. Meta’s LLaMA model is getting smarter with time. And with the inclusion into WhatsApp, a messaging app many users already have, the profoundly powerful Meta AI will be as close as ever to users.
I think it’s a mistake to bet against Meta. Not only is it one of the leaders in AI and, perhaps more importantly, in monetizing the technology, but its shares remain relatively affordable compared to most of its Magnificent Seven peers, at just 30.0 times trailing price-to-earnings (P/E).
Apple
Back in December 2024, Morgan Stanley (NYSE:MS) praised Apple (NASDAQ:AAPL) as one of its top picks for the new year, citing the “largest device upgrade cycle ever” on the horizon. Fast forward a month, and AAPL shares have become one of the most-hated stocks in the market, now down over 14% from its December highs.
Indeed, Morgan Stanley picked a bad time to name Apple as one of its top picks. However, it doesn’t appear they’ll change their views on the iPhone maker just because so many other analysts have driven the stock lower with untimely downgrades.
With share losses in China and a lack of a Chinese AI dance partner, the future may not look bright today. However, I do think things could turn very quickly. All it’ll take, I believe, is an AI partner in China, and Apple could be back to taking market share again. Either way, investors are growing tired of the firm playing from behind on AI.
Though Apple Intelligence may have been overhyped by ads, I do think that the promise of Apple Intelligence will be delivered with time. Remember, Apple is not one to rush its products, whether they be software or hardware. Sure, they may overuse the superlatives to describe products in keynotes and ads, but I do think that such words are a great descriptor of what Apple Intelligence will become in due time.
It’s becoming harder to listen to the bulls with AAPL stock in a correction of its own making while the S&P 500 surges to new highs. Regardless, I’m inclined to agree with Morgan Stanley, and not the growing number of new bears, that Apple will reward patience.
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