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Key Points
The stock market is taking a breather after a relentless run, but opportunities still abound, according to some on Wall Street.
The Nasdaq Composite (^IXIC 1.77%) has climbed consistently higher over the past couple of years as technology investors have sought to profit from the economic recovery, the rapid adoption of artificial intelligence (AI), the slowing of inflation, and the ongoing campaign to lower interest rates. After notching gains of 43% in 2023, the index tacked on an additional 29% in 2024.
Investing offers no guarantees, but history suggests there could be more upside in store for investors in 2025. Looking back as far as 1972 — the first full year of trading for the Nasdaq Stock Market — in every year following gains of 28% or more, the tech-focused index gained another 19%, on average. This suggests the coming year could be a profitable one for investors.
Let’s look at two Nasdaq stocks that could soar in 2025, with potential upside of up to 153%, according to certain Wall Street analysts.
Image source: Getty Images.
The first Nasdaq stock with the potential for significant upside is ASML (ASML 1.99%). The company manufactures the advanced lithography systems used to produce microchips. ASML is also the only company in the world that supplies extreme ultraviolet (EUV) lithography technology, which is used by chipmakers to create the world’s most advanced semiconductors. This gives ASML a distinct advantage over its competitors.
For example, Taiwan Semiconductor Manufacturing produces an estimated 92% of the world’s most advanced chips and is ASML’s largest customer. This illustrates that ASML continues to benefit for the accelerating demand for AI.
In the third quarter, ASML’s revenue jumped 12% year over year to 6.67 billion euros (roughly $6.85 billion) while reporting earnings per share (EPS) of 5.28 euros (about $5.42), an increase of 10%.
CEO Christophe Fouquet expects the company’s accelerating growth to continue, forecasting net sales of 32.5 billion euros in 2025 at the midpoint of its guidance, an increase of 16% compared to its full-year 2024 sales forecast. The chief executive goes even further, saying ASML’s sales growth should average between 8% and 14% over the coming five years.
Some on Wall Street believe investors are missing the forest for the trees. Included among their ranks is JPMorgan analyst Sandeep Deshpande. He maintains an outperform (buy) rating on ASML, with a price target of $1,148. That represents upside potential of 66% compared to Tuesday’s closing price.
The stock price is down 36% from its July peak, as some system sales have been pushed out until next year. The analyst believes this is a mere speed bump and will set the stage for a rebound as sales ramp up — representing a compelling opportunity for long-term investors.
Given the accelerating demand for AI and the company’s strategic place in the semiconductor industry, I think now is the time to buy ASML as the secular tailwinds of AI continue to ramp up. And at just 28 times forward earnings, the stock is attractively priced in the context of its growing opportunity.
The proliferation of e-commerce and the race to deliver ever-faster shipping has created the need for more efficient fulfillment operations and advances in warehouse automation — and Symbotic (SYM 3.76%) is leading the charge.
The company offers a comprehensive suite of customizable AI solutions to automate the processing of full pallets and the peeling off of individual cases to maximize available warehouse space. Symbotic employs sophisticated algorithms and an army of robots equipped with computer vision that work in tandem to move pallets, load and unload delivery vehicles, and separate individual containers. This helps increase efficiency and uses every available inch of warehouse space, ultimately saving users money.
Symbotic notes that its systems increase efficiency, reduce labor costs, and dramatically lower operating and delivery expenses, while achieving a 30% to 60% reduction in space requirements. As a result, the return on invested capital (ROIC) is equally dramatic, and the system can generally pay for itself in a very short time. In fact, Symbotic estimates the purchase of each module can pay for itself numerous times over, saving customers tens or even hundreds of millions of dollars, depending on the overall size of the system.
The results are compelling. In its fiscal 2024 fourth quarter (ended Sept. 28), Symbotic generated revenue of $577 million, an increase of 47% year over year, resulting in EPS of $0.05, swinging from a considerable loss in the prior-year quarter.
Symbotic restated some of its quarterly reports in 2024, which sent some investors running for the exits. However, management noted these resulted in timing differences with “no impact to full-year fiscal year 2024 results.” Early last month, Symbotic filed its completed annual report with no additional changes, removing the final shadow the hung over the stock.
On the heels of these developments, Cantor Fitzgerald analyst Derek Soderberg reiterated an overweight (buy) rating and $60 price target on the stock, which represents potential upside of 153% compared to Tuesday’s closing price. The analyst’s optimism was confirmed after a recent meeting with management regarding its ongoing global expansion and progress with its warehouse-as-a-service joint venture.
Even more intriguing is the price tag, as Symbotic’s is selling for less than 1.3 times sales. I view that as an attractive price to pay for a key player in an emerging industry.
JPMorgan Chase is an advertising partner of Motley Fool Money. Danny Vena has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, JPMorgan Chase, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
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