Shares of Palantir Technologies (PLTR) and Broadcom (AVGO) delivered impressive returns in 2024. These technology companies have seen their shares more than double, substantially outperforming the S&P 500 Index ($SPX).
Palantir stole the spotlight, with its stock skyrocketing an astounding 360%. The surge reflects the soaring demand for its artificial intelligence (AI) solutions, which find use cases across industries.
Broadcom ended 2024 on a solid note, with its shares climbing by over 115%. The company also benefited from AI tailwinds.
Given their impressive growth, these stocks are undeniably expensive in terms of their valuations. However, their strong fundamentals and growing demand make them compelling long-term investments. Thus, any dip in these stocks could be a buying opportunity in 2025. Here’s a closer look at what makes them top tech stocks for 2025 and beyond.
Tech Stock #1: Palantir
Palantir continues solidifying its position in the AI and data analytics software segment, delivering a series of strong quarterly performances that highlight the company’s expanding market presence. In the third quarter of 2024, Palantir’s top line jumped 30% year-over-year, marking its sixth consecutive quarter of accelerating growth rates. This reflects the increasing adoption of its Artificial Intelligence Platform (AIP), which has proven to be a key growth catalyst for the company.
The demand for Palantir’s AIP has been robust, with the company securing 104 new contract valued at over $1 million. This shows the expanding role of AI in the software industry and Palantir’s growing presence within both commercial and government sectors. As more industries turn to complex data for actionable insights, Palantir’s AI-powered solutions remain highly sought after for their scalability and adaptability across diverse clients.
Not only is Palantir benefiting from this solid demand, but the company’s financial position is also thriving. The company generated significant free cash flows and had $4.6 billion in cash and investments at the end of Q3, giving it ample liquidity for strategic acquisitions and continued innovation.
Despite these positive indicators, valuation concerns linger. The stock’s price-sales ratio of 79.01x far exceeds peers, with analysts projecting potential downside and maintaining a consensus rating of “Hold.”
While Palantir’s valuation raises concerns, its robust financial performance in 2025 could keep the momentum going.
Tech Stock #2: Broadcom
Broadcom, a prominent player in semiconductor and infrastructure software solutions, has experienced robust growth driven by its AI-focused products. The company’s custom-designed AI accelerators, known as XPUs, alongside its robust Ethernet networking products, have been key drivers of its financials and share price.
Broadcom's AI revenue surged from $3.8 billion in fiscal 2023 to $12.2 billion in 2024, bolstered by an impressive jump in AI-related networking sales.
Further, the company’s products, like Tomahawk and Jericho3-AI switches, have gained significant traction among hyperscale customers looking to expand their AI infrastructure. Additionally, Broadcom’s AI XPU shipments to these hyperscalers have doubled year-over-year, with AI connectivity revenue experiencing a remarkable fourfold increase. As demand for scalable AI networking solutions continues to soar, the company is poised to maintain this upward trajectory through 2025 and beyond.
The company plans to introduce next-generation XPUs built on advanced 3-nanometer technology, strengthening its position in the AI accelerator market. With the addressable market for XPUs and networks projected to reach as high as $90 billion by 2027, Broadcom is well-positioned to capture a substantial share, particularly as hyperscalers deploy large-scale AI XPU clusters.
While concerns about valuation and potential softness in some of its segments, such as wireless, remain, Wall Street analysts are bullish, with a consensus rating of “Strong Buy.” For investors, Broadcom’s leadership in AI innovation and promising market prospects make it an attractive investment opportunity for 2025.
The Bottom Line
Palantir and Broadcom offer compelling opportunities but at a premium price. Their strong market positions, innovative products, and promising growth prospects in the AI sector make them two of the most attractive tech stocks in the market.
While valuation concerns linger, any pullbacks in these stocks could present an opportunity for long-term investors seeking exposure to the booming AI industry.
