2 stocks that analysts say could be bargain investments for 2025
The year 2025 brings a number of opportunities for investors looking for stocks with the potential for significant growth. According to analysts, there are companies that could benefit from technological innovation and changing market conditions, and whose stocks appear to be attractive investments. In this article, we'll focus on two specific technology stocks that could be good choices for the year ahead.
Below, we'll focus on two stocks that analysts say look like bargain investments for years to come.
ASML - The king among lithography machine manufacturers
ASML $ASML is not a familiar name to most people, but it is one of the most important technology companies in the world. The company is a leader in the production of lithography machines, which chip manufacturers like Taiwan Semiconductor Manufacturing Company (TSMC) use to make semiconductors. ASML is also the only manufacturer of extreme ultraviolet (EUV) lithography machines used to produce the most advanced chips, including those used for artificial intelligence (AI).
This position gives ASML a significant competitive advantage, although the company has not performed as well as analysts expected this year. As of Dec. 26, 2024, the stock was down 5.5%, with demand from China slowing, orders weaker than expected, and the company cutting its 2025 outlook.
The semiconductor industry has its own cycle that is separate from actual chip production, and the sector is currently experiencing a weaker period, partly due to delays in new factory construction. But these projects are coming. Companies such as Intel, Micron Technology (MU) and TSMC have received billions of dollars from the US government under the CHIPS Act to build new factories in the US, and the boom in AI is leading to an expansion of manufacturing in other parts of the world. However, these projects typically take several years to complete, which means that the timeframe for when demand will pick up is uncertain.
However, analysts expect ASML to return to strong and steady growth in 2025. Management estimates that the company's revenue will reach between €30 billion and €32.5 billion in 2025, representing a 15% growth rate. Margins should also improve as the company deals with the challenges of 2024 and as its business scales up.
Micron Technology - A cyclical and strong growth company
Another stock that had its issues in 2024 is Micron Technology $MU, a memory chip maker. Micron's stock surged in early 2024 as it was considered one of the winners in the artificial intelligence space. However, that growth subsequently slowed when subsequent results were not as strong as analysts expected.
But this puts Micron in a favorable position for 2025. Micron is still showing strong year-over-year growth, and its stock is available at a relatively low price-to-earnings (P/E) ratio of 10, which is very attractive given its expected earnings in the current fiscal year.
Unlike most chipmakers, Micron designs and manufactures its own chips, making it a very cyclical business. The good news for investors is that the company is taking advantage of the growing demand for AI. Its revenue for the first quarter of the fiscal year nearly doubled to $8.7 billion. And interestingly, for the first time ever, data center revenue accounted for more than 50% of total revenue. This shows that Micron is successfully capitalizing on the growing AI market. Micron's biggest customer is likely Nvidia, which may help further growth.
With the demand for AI chips likely just beginning, Micron's stock could rise significantly in the coming years. With a P/E ratio of only 10, this stock looks like a real opportunity.
Disclaimer: There is a lot of inspiration to be found on Bulios, but stock selection and portfolio construction is up to you, so always do a thorough analysis of your own.
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