Investors pondering which stocks to pick for 2025 face the challenge of factoring in a number of trends which are impacting the world economy. These are the stocks best positioned to outperform as geopolitical realignments and new technologies such as AI expand their influence over the markets.
Amazon (AMZN)
Past performance is not an indication of future results.
- Back-to-back impressive annual share price gains in 2023 and 2024 have been welcomed by those already holding Amazon.com, Inc. (AMZN) stock, but there are still good reasons for new investors to buy into the stock.
- The price-to-earnings (P/E) ratio of AMZN is a challenging 45.88 but the company’s cash flow is increasingly showing signs of holding up. In Q3 of 2024, reported earnings came in at $15.3bn, a year-on-year increase of +50% and free cash flow nearly tripled over the same time frame.
- Despite its growth stock feel, Amazon has now been operating for more than 30 years and now has more than 200m Amazon Prime customers. It is well established, benefits from its first-mover advantage, and there are significant barriers to entry facing any competitors.
- AWS is now the market leader in the $300bn cloud services market, but the synergies with other Amazon divisions are equally valuable. The roll-out of the AI virtual shopping assistant Rufus in September 2024 is one example of how Amazon can link up its business divisions to boost overall revenues.
- Amazon stock is by no means “cheap” at current levels, but the firm’s ability to ride out short-term challenges and generate long-term growth can be tied into market analysts making a prediction that the stock could increase in value by 10% from current levels.
- Amazon’s retail operations have cornered the market in terms of consumers who prioritise scale and speed of delivery. But the increased market share of budget operators Shein and Temu highlights the risk associated with Amazon not being able to be all things to all people.
- The price range of $210.16–$214.03 is important from a technical analysis perspective. It contains multiple supporting trend lines and important moving averages over multiple time frames.
Your capital is at risk. Not investment advice.
Alphabet (GOOG)
Past performance is not an indication of future results.
- Stocks in Google’s parent company, Alphabet (GOOG), posted an impressive +40% return in 2024, but the stock was the worst performing of the Magnificent 7 stocks, leaving room for further gains into 2025, and beyond.
- Trends supporting its new ventures as well as its core business base show no signs of slowing down and the firm is successfully leveraging the available synergies between its different divisions.
- Earnings figures for Q3 2024 recorded an increase in net income of 34% and EPS increasing by 37% to $2.12.
- The search business is still generating a reliable cash flow and Google’s Gemini tool is gaining popularity among early adopters of AI technology. Gemini usage increased fourteen-fold in a six-month period in 2024.
- Groundbreaking developments such as the Willow quantum computing chip illustrate how GOOG continues to maintain its pioneering spirit.
- Analysts predict earnings growth in 2025 of 12% and while that would be welcomed by many investors, Alphabet still represents an attractive long-term proposition.
- The way that users get information from the web is constantly changing and poses a risk to GOOG investors. Amazon’s voice-activated assistant Alexa and now generative AI models such as Chat GPT pose a risk to Google’s core search business.
- The $193.01 price level is now a key point of support/resistance. It marks the previous all-time-high recorded in July 2024 and the price remaining above that level can be interpreted as a bullish technical analysis signal.
Your capital is at risk. Not investment advice.
JP Morgan (JPM)
Past performance is not an indication of future results.
- JP Morgan Chase & Co. (JPM) could be a good stock pick for investors looking to gain exposure to the banking and finance sector in 2025.
- Banks have benefitted from interest rates rising from historically low levels. Spreads on saving and loan interest rates were able to widen as the base interest rate moved away from being close to zero.
- The chance of interest rates not falling as fast as some predicted — might negatively impact other sectors of the economy, but as JP Morgan holds assets of $4.1trn, that represents an opportunity for the company to protect its income streams.
- Guidance from the company on its net interest income has been upgraded from $91bn to $92.5bn.
- Investors will obviously be hoping for impressive economic growth in 2025, but should there be a slowdown or recession, JPM’s robust balance sheet will be boosted by the bank having a high Tier 1 capital ratio.
- Last year’s Q3 earnings report saw JP Morgan report earnings per share (EPS) of $4.37, up 1% on a year-on-year basis and a “beat” of analyst forecasts which estimated the number would be $4.01. Adjusted revenue climbed by 6% over the same time frame.
- Part of JPM’s appeal is the resilience of its business operations rather than its growth potential. That is worth remembering at a time when the JPM stock price has outperformed the S&P 500 Index over the last year. There is a risk that any potential stock price rises have already taken place.
- JPM stock is in a medium- to long-term rising trend channel which started forming in October 2022. As long as the stock price does not break the supporting trendline of that pattern, investors can consider bullish momentum to be sustained.
Your capital is at risk. Not investment advice.
Siemens (SIE.DE)
Past performance is not an indication of future results.
- Industrial giant Siemens (SIE.DE) is proving that it is not only IT sector stocks which can embrace and benefit from the adoption of groundbreaking AI technology.
- New game-changing technologies are being implemented and rolled out to the Siemens’ customer base through innovative products and services such as Siemens Xcelerator, which enhances connectivity between separate IT systems.
- The proposed sale of some of the company’s shares of Siemens Energy, which is forecast to take place in Q4 of 2025 could net the parent company €2bn. That windfall could be reinvested in new business ventures or returned to shareholders in the form of improved dividends or share buybacks.
- Tie-ups with other corporate giants demonstrate Siemens’ appetite for aggressively expanding its services into new areas. Siemens NX product engineering technology is being used by Sony Corporation to create an industrial metaverse and NVIDIA Omniverse technology is used in the Siemens Teamcenter Digital Reality Viewer which operates product lifecycle management (PLM) systems.
- The Q4 2024 earnings report included a range of strong balance sheet metrics, including net income of €2.1bn, a year-on-year increase of 10.5% and €5.0 billion of free cash flow.
- Siemens’ strength is its ability to deliver on long-term plans. Since it is an election year in Germany and the political environment is increasingly unstable, there is an increased risk of projects coming in late and over budget.
- Investors can take comfort in the fact that Siemens’ share price has broken above the 2024 high. It is also worth noting that there is strong support at €180, which acts as a good line in the sand for investors.
Your capital is at risk. Not investment advice.
Eli Lilly (LLY)
Past performance is not an indication of future results.
- Pharma giant Eli Lilly’s (LLY) share price was suppressed in 2024, but recent developments suggest that things could be about to change.
- The company now has a suite of weight-loss drugs which can tap into a booming market. Mounjaro looks set to be a credible competitor to Novo Nordisk’s (NVO) Ozempic; and the Food and Drug Administration approved Zepbound in December 2024.
- In a recent study of 18,000 patients, those taking Mounjaro 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 as patients taking Ozempic.
- Until now, supply-side issues relating to Mounjaro have deterred investors from buying into LLY stock, but the purchase of Nexus Pharmaceuticals has bolstered Eli Lilly’s manufacturing base and is being supported by a $3bn investment in new facilities.
- The significant “miss” in the Q3 2024 earnings report saw LLY post adjusted earnings of $1.18 per share, which was much below the expected $1.45. But that short-term blip can be seen as a buying opportunity in preparation for drug production issues being resolved.
- Investor sentiment regarding Eli Lilly is shifting and following a series of recent analyst upgrades of the 23 brokers covering Eli Lilly, 18 now rate it a “buy,” and 4 mark it as a “hold.”
- Despite the attractive long-term prospects of LLY stock, there continues to be a relatively high degree of short-term price volatility. Investors need to be aware of the risk of finding that they’re holding a stock which is outside their risk threshold. Especially if the firm is going to continue to surprise investors with more earnings forecasts downgrades such as the one seen in October.
- The break of the supporting trendline which guided LLY’s upward price move between March 2023 and November 2024 has been followed by a period of price consolidation rather than a continued sell-off. This could reflect investors taking time to analyse to what extent the company will be able to upgrade its production capacity, and how long it might take for improvements to be translated into improved earnings.
Your capital is at risk. Not investment advice.
Final thoughts
Investing in markets which are already showing bullish sentiment comes with its own set of risk factors. It could be that the good news is already priced in. There is also a need to consider how geopolitical events and macroeconomic cycles could impact the stock sector as a whole. Even if these stocks do outperform their peer group, they could still fall in value.
Carrying out careful research and ongoing risk management are crucial elements of getting the most out of stock investing. Taking a long-term view also helps, which is why these top stock picks for 2025 include firms which could post long-term gains. The selection also targets stocks from different sectors, so that they offer a way of building a diversified portfolio designed to ride out the inevitable ups and downs of the markets.
Discover stocks and other asset classes on eToro.
This information is for educational purposes only and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to, buy or sell any financial instruments.
This material has been prepared without regard to any particular investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Not all of the financial instruments and services referred to are offered by eToro and any references to past performance of a financial instrument, index, or a packaged investment product are not, and should not be taken as, a reliable indicator of future results.
eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this guide. Make sure you understand the risks involved in trading before committing any capital. Never risk more than you are prepared to lose.