Major tech stocks have continued to drive markets higher this year, as investors backed the global AI boom. Here's how experts think tech giants could perform in 2025.
Investor sentiment towards big tech names has been key to market performance, helping propel US indices to fresh record highs.
Susannah Streeter, head of money and markets at Hargreaves Lansdown (HL.L), said this group of stocks "are set to continue to exert huge influence over Wall Street performance".
"AI remains one of the most exciting and fast-moving sectors in the market so 2025 will shape up to be a pivotal year, continuing to offer opportunities for investors," she said, but added that the scale of future demand would be hard to forecast.
"The huge sums needed to be ploughed in to keep up with the tech pack are also eye-watering and companies will need to show benefits are coming thick and fast to account for splashing so much cash," Streeter said. "As with most new innovations, it's still set to be a bumpy road ahead and some promises might not live up to their hype."
Here's how investment experts think major tech stocks could fare in 2025.
Much of the market buzz in the tech space has been around chipmaker Nvidia in 2024, with the stock up 176% year-to-date.
Bullishness about Nvidia's role as an enabler of the global push into AI drove its share price performance, pushing it to overtake Apple as the world's most valuable company at one point. The stock has since fallen back to second place, with a market capitalisation of $3.3tn (£2.6tn).
Investors have developed high expectations around Nvidia's results, with even slight misses in certain areas denting share price performance. The stock fell after the release of the company's third quarter results, as even though key metrics topped expectations, investors appeared disappointed by a decline gross margins and the company's guidance on revenue, fuelling concerns over slowing growth.
However, Morgan Stanley analysts kept an "overweight" rating on Nvidia in a note on 21 November, and said the stock remained their top pick in the semiconductor space.
They said that the company's AI Blackwell chip "is in full production with demand well ahead of supply for the next several quarters, [and] supply continues to be the limiting factor to growth."
At the same time, the analysts also said that "on peak earnings power we still see the stock as less expensive than other AI beneficiaries, while everything else in semis continues to suffer from cyclical pressures."
Another tech stock that has drawn much focus this year is electric vehicle (EV) maker Tesla, with the stock recently reaching a new high of $479.86.
A major catalyst behind the share price surge was Trump's US election victory, as Tesla CEO Elon Musk was a big supporter of the Republican president-elect's campaign. Musk has been appointed to co-lead the extra-governmental Department of Government Efficiency (DOGE) and investors believe that Trump's return to the White House could offer a more supportive policy environment for Tesla.
Shares in Tesla are up 76% year-to-date and even with some concerns around the lack of detail offered at the electric carmaker's robotaxi event in October, investors have remained bullish on the stock.
In a note released on 10 December, Morgan Stanley analysts reiterated their overweight rating as their top pick out of the US automakers and raised the price target on the stock from $310 to $400.
"Musk's entry into the political sphere has expanded investor thinking around Tesla’s fundamental outlook," they said.
"Musk's emergence from a political ‘outsider’ to having a voice in potential policies may, at some level, accelerate Tesla’s journey beyond autos."
Wedbush Securities analyst Dan Ives has raised his price target on the stock even higher, to $515 per share. In addition to the potentially supportive environment under Trump, Ives said he was also optimistic about Tesla's progress on full self-driving technology.
The focus for investors in Apple this year has been iPhone sales, following the launch of its latest model in September, and the rollout of its Apple Intelligence AI platform.
Apple's most recent results showed that iPhone sales had beaten forecasts, at $46.2bn for its fiscal fourth quarter, against expectations of $45bn. However, revenue of $24.9bn from its services business, fell short of expectations of $25.2bn.
Apple launched its latest iPhone in September. ·REUTERS / Reuters
Hargreaves Lansdown's Streeter said: "Innovations on phones have been fewer and far between so there is a lot riding on the appeal of these new integrated tools.
She said that while growth in Apple's services business "didn’t quite meet expectations in the last quarter but going forward this area of the business is set to be a key profit driver."
"There is higher margin potential and significant appeal for consumers with the bundling of popular apps like music and TV, however growth will be reliant on phone sales," she added.
Regulatory headwinds have led to some volatility in Google-owner Alphabet's share price this year, with the stock up 39% year-to-date.
In November, the US Department of Justice (DOJ) asked that Google be forced to sell off its Chrome browser, as part of proposed remedies aimed at ending the company's dominance in internet search.
This filing came after a judge ruled in favour of prosecutors in a landmark trial in August, who argued that that Google ran its search engine empire as an illegal monopoly. The judge will will now decide what should happen next in a separate "remedies" phase of the trial that will likely start in 2025.
Despite these concerns, Alphabet has continued to show strong performance, with the company smashing estimates in its third quarter results. Alphabet posted earnings per share of $2.12, versus expectations of $1.83 and revenue of $88.27bn came in well ahead of estimates of $86.44bn.
The stock has recently surged to a fresh high, with the an announcement from Google on quantum computing helping boost the share price. Early in December, Google unveiled its quantum computing chip Willow, which it said demonstrated "error correction and performance that paves the way to a useful, large-scale quantum computer."
Streeter said that even if Google’s power were diminished by regulatory changes and "it’s not able to be the default search engine on devices owned by big tech giants, it’s sheer might of reputation in the world of search is likely to propel users towards it, nonetheless."
"The power of Google over the latest quarter indicates that its already harnessing AI technology to deliver improvements and get more fingers searching and more eyes on screen," she said.
"Google is not a one trick pony when it comes to AI," she added. "Its tentacle approach, wrapping the technology into many crevices of the business makes it an attractive proposition."
Musk isn't the only tech CEO that has sought to forge closer ties with Trump ahead of him returning to the White House in January.
Mark Zuckerberg's social media giant Meta Platforms donated $1m to Trump's inaugural fund. This came not long after reports suggested that Zuckerberg was looking to secure some influence in Trump's incoming administration.
Reports suggested that Meta CEO Mark Zuckerberg was looking to secure some influence in Donald Trump's incoming administration. ·REUTERS / Reuters
The Financial Times (FT) reported that Sir Nick Clegg, Meta's president of global affairs, said in a press briefing that Zuckerberg was keen to play "an active role in the debates that any administration needs to have about maintaining America’s leadership in the technological sphere".
As for company performance, Meta beat estimates in the third quarter, posting earnings per share of $6.03 versus expectations of $5.25. Revenue of $40.5bn also came in ahead of forecasts of $40.2bn.
However, Meta's guidance for the fourth quarter disappointed against investor expectations. Meta guided to revenue of between $45bn and $48bn for the fourth quarter, with analysts looking for $46.09bn. The company also said it expects capital expenses to grow significantly in 2025.
Even so, Meta shares are still up nearly 70% year-to-date. Morgan Stanley analysts said in a note on 14 November that they had an "overweight" rating on the stock.
"We think that Meta's 'year of efficiency' is more than just a 365-day change... but rather a structural and cultural pivot to operate leaner and with a greater focus on investor returns... even through investment," they said.
"Importantly, revenue and engagement trends are also improving across Meta's platform," the analysts added.
One of the latest areas of competition for tech companies is digital agents powered by AI, with Microsoft recently jumping into this space.
Microsoft announced the rollout of its Copilot AI features in October, which aim to enhance business productivity by automating routine administrative tasks.
Futurum Group CEO Daniel Newman told Yahoo Finance that he projected AI agents represent a $4tn annual global market opportunity over the next five years, describing it as "a massive opportunity" for companies.
In terms of how Microsoft has performed more broadly, the company's latest results in October didn't quite match Wall Street's expectations, despite beating forecasts on key metrics.
Microsoft said commercial revenue which includes cloud services sales, came in at $38.9bn compared to expectations of $38.1bn. The company also posted earnings per share of $3.30, which were ahead of of analyst forecasts of $3.10.
Hargreaves Lansdown's Streeter said: "Microsoft has planted itself in the centre of the AI revolution and shoots of growth from artificial intelligence are sprouting fast in all divisions."
"Microsoft’s products and services infiltrate all areas of work and play and the way it’s own software stack will integrate its new AI capabilities is an added benefit, though there will be a watch on just how eager companies will be to snap up new subscriptions offering access to Microsoft’s CoPilot across its apps."
A key area of growth for e-commerce giant Amazon is its cloud business, Amazon Web Services.
While sales of $27.5bn for the third quarter came in line with Wall Street expectations, this was still up 19% year-on-year.
For the company as a whole, revenue of $158.9bn came in ahead of estimates of $157.29bn, while earnings per share of $1.43 bested forecasts of $1.16.
A key area of growth for e-commerce giant Amazon is its cloud business, Amazon Web Services. ·Noah Berger via Getty Images
Morgan Stanley analysts maintained an "overweight" rating on the stock in a note on 5 December.
They said that at this year's AWS re:Invent conference, the company announced a "multitude of new applications, products and features rooted in generative AI".
"Amazon placed an emphasis on genAI tools that can generate productivity gains, efficiencies for customers, and early examples of its customers seeing these productivity gains and efficiencies," they said.
The analysts said that they expected continued product innovation to lead to "durable high-teens AWS revenue growth" into 2025 and 2026.
Software firm Palantir is up 370% year-to-date, making it one of the best performers in the S&P 500.
The stock has soared since the release of its third quarter earnings, which topped estimates. The company also raised its full-year revenue to between $2.805bn and $2.809bn.
Part of Palantir's business is in the defence sector, which includes helping the US army with data insights, so it's considered a stock that could benefit from Trump's return to the White House.
According to a Financial Times report, Palantir Technologies and Anduril Industries, two of the largest US defence technology firms, are said to be in discussions with around a dozen other high-profile competitors, to form a consortium aimed at securing US government contracts.
Speaking about the firm as a whole, Streeter said: "In the world of AI, data is king and Palantir is the astute courtier recognising its power.
"Its platforms are deeply embedded across a wide range of industries like national security, healthcare, and financial services, where it services many diverse customers.
"However, Palantir’s growth prospects are closely tied to how well it can continue to expand its customer base, while navigating the complex regulatory environments that govern data usage, and with the technology evolving so fast there is set to be some challenges ahead here.
"Expectations however are high, and so there is little room for missteps given the high valuation.’"
Customer relationship management (CRM) software provider Salesforce is another company now focusing on an AI agent offering.
The company has reportedly set out to hire more than 1,000 workers to help sell its new Agentforce generative AI product.
Salesforce CEO Marc Benioff said in the company's third quarter earnings release that Agentforce was "at the heart of a groundbreaking transformation".
"The rise of autonomous AI agents is revolutionising global labour, reshaping how industries operate and scale," he said.
Looking ahead, Salesforce slightly raised the lower end of its full-year revenue guidance. The cloud-based software company is now expecting revenue to come in between $37.8bn and $38bn for the year, up from a previous estimate of $37.7bn to $38bn.
Streeter said that Salesforce's early adoption position of an AI agent product "looks promising".
"Looking more broadly, having spent the past year or two rightsizing the business, costs are in a much better position and the benefits are being felt on both the profit and cash flow lines," she said.
"Salesforce also has a wide range of interlinked products helping ensnaring customers in its ecosystem. Better bundling of cloud products and an improvement in how its deep wells of data can be used could help keep customers loyal and that annual recurrent revenue ticking up."
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Given the many announcements of new AI product developments this year, such as agents using this technology, the focus next year will be on how demand for these areas of investment pans out.
When investors consider these stocks, Streeter said that it's "important to look for companies with real-world applications and a proven track record and keep an eye on emerging regulatory and supply chain trends."
