Unlocking the Potential: Two Promising Growth Tech Stocks to Watch in 2025

The stock market has been on a rollercoaster ride, with volatility returning over the summer. However, the widely followed S&P 500 index has once again hit new highs, signaling a potential resurgence in investor confidence. As the market continues to climb, Wall Street analysts are turning their attention to two growth tech stocks that could soar in the coming years: Broadcom (AVGO) and Advanced Micro Devices (AMD).

Unleashing the Power of AI and Beyond: Broadcom's Promising Future

Riding the Wave of AI Semiconductor Demand

Broadcom is experiencing strong demand for its artificial intelligence (AI) semiconductor solutions, which enable data centers to efficiently move and process vast amounts of data – a critical feature for AI training and deployment. The company's AI-related products have been a significant driver of its recent growth, contributing to a 44% projected increase in revenue this year, reaching an impressive $51 billion.

Diversifying Beyond AI: Broadcom's Non-AI Segment Rebounds

While Broadcom's AI-powered business has been thriving, the company's non-AI revenue is also showing signs of recovery. After a period of weakness in markets like smartphones and broadband, Broadcom's non-AI networking revenue grew 17% sequentially in the previous quarter, and management is optimistic about the growing demand for its non-AI chip business. This signals a potential bottom for these segments, which could provide an additional boost to Broadcom's overall performance.

Firing on All Cylinders: Broadcom's Promising Outlook

Analysts expect Broadcom's revenue and earnings to grow by 17% and 28%, respectively, in fiscal 2025, reflecting the company's ability to capitalize on both its AI and non-AI business segments. With a forward price-to-earnings (P/E) ratio of 28 based on next year's consensus earnings estimate, Broadcom's valuation appears reasonable, especially considering its projected annualized earnings growth rate of 19% over the next several years. As the company continues to execute on its strategic initiatives, investors can expect Broadcom's shares to reach new highs in the coming year and beyond.

AMD's Ascent: Powering the Future of AI and Beyond

Challenging Nvidia's GPU Dominance

While Nvidia controls the lion's share of the graphics processing unit (GPU) market, which is crucial for AI workloads, AMD is a strong second-place player. The company's MI300 GPUs have been in high demand, driving a remarkable 115% year-over-year increase in its data center revenue last quarter. This positions AMD well to capitalize on the growing need for powerful AI-enabled hardware.

Unlocking Xilinx's Potential: Expanding AMD's Opportunities

Analysts believe that investors may be overlooking the significant potential of AMD's acquisition of Xilinx in 2022. Xilinx is a leading supplier of programmable and adaptive chips, which expands AMD's opportunities in cloud, edge computing, and intelligent devices. The addressable market across these segments is estimated at a staggering $135 billion, and Xilinx's high-margin revenue is already contributing to AMD's business.

Exceptional Growth Prospects and Attractive Valuation

AMD's stock trades at a forward P/E of 30 based on 2025 earnings estimates, which appears modest compared to analysts' forecast of 41% annualized earnings growth in the coming years. This combination of exceptional growth potential and a relatively attractive valuation makes AMD stock a compelling buy, especially on any dips. As the company continues to report strong earnings results in the next few quarters, its stock is expected to climb back to new highs, rewarding investors who recognize its long-term potential.