2025 looks set to be a year where structural changes within the global economy will present a range of outstanding investment opportunities. These are the growth stocks which could benefit as macro developments — ranging from AI advancements to political upheaval — change the investment landscape.
TSMC (TSM)
Past performance is not an indication of future results.
- Taiwan Semiconductor Manufacturing Company (TSM) stock doubled in value in 2024, and there are very good reasons to believe the uptrend could continue.
- The chips TSM makes are vital for the rollout of AI — and that sector is showing few signs of slowing down quite yet.
- More established industries such as auto manufacturing and smartphones are also rebounding and increasing demand for TSM products.
- As the world’s largest contract chip manufacturer, TSM is best positioned to meet any surge in demand from the wider economy. Current revenue forecasts point to a groundswell of demand for chips and for TSM’s compound annual growth rate (CAGR) to rise by 15–20% over the next several years.
- Annual CAGR growth in AI-related chips is even more impressive and is forecast to rise by 50% by 2029.
- On a comparative basis, the potential growth of TSM’s business is not reflected in the current share price, which is x32.5 trailing earnings and x28.9 forward earnings. When measured against those metrics, TSM stock is cheaper than Apple and Microsoft, which are growing at a slower rate.
- Over the last twelve months, TSM’s capital expenditure has totalled $24.6bn. That is more than Apple, Tesla and NVIDIA combined. Scaling up on infrastructure always involves an element of risk, and leaves TSM reliant on sustained growth in chip demand.
Your capital is at risk. Not investment advice.
Shopify (SHOP)
Past performance is not an indication of future results.
- The long-term prospects of e-commerce platform Shopify (SHOP) remain impressive, and just as important, there is capacity for further growth.
- The niche Shopify has established is showing signs of resilience. The way the platform allows its clients to sell directly to customers rather than relying on a middleman such as Amazon or eBay, continues to make it an attractive solution for business owners.
- Through 2024, Shopify facilitated more than $270bn of merchandise sales which translates into $8.2bn of revenue for the firm.
- That top-line growth is forecast to continue at an impressive rate, with the prediction for 2025 revenue being $10bn, a +20% increase.
- The company is at the same time becoming more efficient — which in the long term, can only be good news for the bottom line. Studying Shopify’s sales to total assets (S/TA) ratio shows how the firm is utilising its assets to generate sales. Shopify’s S/TA score of 0.71 outperformed the industry average of 0.67.
- Despite the attractive attributes of SHOP stock, there are risks involved with buying in at an inflated price. A range of alternative investment options will appear more attractive to some, particularly when the SHOP P/E ratio of 109.9 is more than double that of Amazon (50.94).
Your capital is at risk. Not investment advice.
MercadoLibre (MELI)
Past performance is not an indication of future results.
- The recent performance of the share price of Latin American e-commerce leader MercadoLibre (MELI) has been increasingly volatile, but that could represent an opportunity for those looking to gain exposure to the growth stock sector in 2025.
- The Q3 2024 MELI earnings report involved a mixture of good and bad news for shareholders and led to a 16% intraday stock price fall.
- The sell-off was triggered by net income only growing by 11% or $7.83 per share, which was a big miss of the consensus $2.02 per share figure expected by analysts.
- At the same time, top-line growth outstripped analyst expectations. Revenue grew 35% from the same time a year ago and came in $5m higher than forecast.
- For growth investors, the continued expansion of revenue outweighs net income being dragged down by costs, a situation which could be rectified if expenditure is streamlined in the foreseeable future.
- The price dip triggered by the miss on net income is a buy signal for those willing to allow time for the cost base to be restructured and for that to feed through into a higher MELI stock price.
- The risk that Mercado Libre might not have mastered converting growth into an improved bottom line is highlighted by the Q3 2024 financial statements. These show the firm’s operating and net margins shrank year-on-year and resulted in the firm posting an earnings miss.
Your capital is at risk. Not investment advice.
Adyen (Adyen NV)
Past performance is not an indication of future results.
- The share price of Dutch payments processor Adyen (Adyen NV) has taken a hammering over the last 24 months and now trades at approximately half of its November 2021 highs.
- The stock fell out of favour with investors as inflation and uncertainty compressed consumer spending, which is a key determinant of Adyen’s stock value.
- But Adyen’s earnings are holding up, and the firm is putting strategic developments in place which could reap rewards.
- Adyen’s average earnings growth over the last 10 years has been 44.77% per year and forecast growth for 2025 is 28.4%.
- Consumer spending, like other business metrics, is cyclical, so buying Adyen stock now puts investors in a position to benefit from an inevitable upturn in that part of the economy.
- Adyen has specific strengths which give it an edge over its competitors, but the payments sector is particularly vulnerable to the risk of a downturn in the macroeconomic climate or interest rates remaining higher for longer.
Your capital is at risk. Not investment advice.
NVIDIA (NVDA)
Past performance is not an indication of future results.
- NVIDIA Corporation (NVDA) has become synonymous with the AI sector. With the company commanding an eye-watering 98% market share of the graphics processing units (GPUs) market, any continuation of the AI boom will inevitably result in increased sales for NVIDIA.
- The revenue from that strong core is being invested in a range of innovative products and services including AI-focused data centres and upgrades to CPU and interconnect technology. Each of those represents a chance for the firm to continue to develop its earnings potential.
- Even if one part of the AI sector does begin to slow down, the vertical integration business model NVIDIA has developed means it is capable of capitalising on whichever features of the AI revolution represent the best growth opportunity.
- With this in mind, analysts predict Nvidia’s earnings will continue to grow, with the consensus being an annual earnings growth rate of 38% over the next three years.
- Those analyst predictions are backed up by recent performance. NVIDIA’s Q3 earnings report for the 2025 fiscal year revealed earnings of $35.1bn, up 17% from the previous quarter and up 94% on a year-on-year basis.
- Approximately 15% of NVIDIA’s current revenue comes from China. Those earnings could be at risk should the US-China political dynamic deteriorate. There are existing restrictions on which chips NVIDIA can sell in China, and an outright ban can’t be ruled out.
Your capital is at risk. Not investment advice.
Eli Lilly (LLY)
Past performance is not an indication of future results.
- The pharmaceutical sector is a natural home for growth stock investors. The companies operating in it live or die by the new products they bring to market and going into 2025, Eli Lillys (LLY) looks like the best opportunity to lock in growth returns.
- The company’s new weight-loss drug Mounjaro, which was approved by the Food and Drug Administration in December 2024, is a direct competitor to Novo Nordisk’s (NVO) wonder drug Ozempic. While Mounjaro doesn’t yet have the same brand recognition, it does have superior features.
- In a recent study of 18,000 patients, Mounjaro’s weight loss figures outstripped those of Ozempic. Participants were twice as likely to lose 5% of their body weight and more than three times as likely to lose 15% of their body weight if they were taking Mounjaro as opposed to Ozempic.
- With the weight loss drug market booming, and the NDA finally approving Mounjuro, it is fortuitous that Eli Lilly has also successfully upgraded its production processes. In early 2024, it bought Nexus Pharmaceuticals to expand its manufacturing base and has also pledged $3bn investment in new facilities.
- The significant “miss” in the Q3 2024 earnings report deflated the LLY stock price. Post adjusted earnings of $1.18 per share came in below analyst expectations of $1.45. But that reflects where Eli Lilly was, not where it is going. The current blip can be seen as a buying opportunity and of the 23 analysts following Eli Lilly stock, 18 now rate it a “buy,” and 4 mark it as a “hold.”
- Consumer reaction to weight-loss drugs is still evolving — which introduces an element of risk. A situation highlighted by the firm alarming investors when it downgraded its earnings forecast for the fiscal fourth quarter of 2024 by $400m.
Your capital is at risk. Not investment advice.
Final thoughts
Investing in stocks always involves an element of risk and recent investor interest in growth stocks has pushed prices up to a level which makes their current valuations challenging. That requires that those looking to get into the sector invest more time in research and analysis. It could be time well-spent. The seismic changes pulsing through the economy mean that those stocks which do benefit from the restructuring could be the next generation of long-term winners.
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