The stock market is finishing off a surprisingly strong year. The year was feared to bring only modest gains but indexes and market leaders defied expectations. Mutual funds that held the year's biggest winners, and Big Tech leaders in particular, reaped the rewards.
Going into 2025, Investor's Business Daily's Stock Screener shows that funds are turning to tech leaders again. But the biggest fund buys don't include Nvidia or Tesla. Instead, our Stocks Funds Are Buying screen shows top fund picks include Taiwan Semiconductor and Google stock. Both are near buy points.
The S&P 500 is on track for a gain of 25% but the Nasdaq had a banner year and is likely to finish about 30% higher after fears of a recession faded. A postelection rally shifted the focus to groups that are likely to benefit from the new administration that takes office Jan. 20. Tech stocks also benefited.
But a different set of risks looms in 2025, and fund managers have their work cut out trying to glean winners. Tariff threats can dampen some stocks' prospects, while a cautious Federal Reserve can weigh down the rate-sensitive corners of the stock market, such as small caps or homebuilders.
Meanwhile, funds are shoring up their bets on tech titans that have been making waves in two growth areas: artificial intelligence and quantum computing.
The artificial intelligence boom has become trickier to navigate lately, with investors and analysts wondering if the leadership has passed on from Nvidia to others. But Taiwan Semiconductor stands to benefit, no matter how the AI battle plays out. The world's biggest contract manufacturer of advanced chips is a top fund pick.
TSMC is near a buy point of 205.63 from a cup-with-handle base, according to IBD MarketSurge. The stock holds top-notch IBD Ratings: The Composite Rating is an ideal 99, while the EPS Rating stands at 98. The Relative Strength Rating of 92 is also impressive.
After several quarters of declining sales and earnings, both Nvidia and TSMC have accelerated in the three most recent quarters. The Janus Henderson Forty Fund (JARTX), which belongs to the IBD mutual fund index, holds shares of TSMC.
Alphabet is also in a buy zone from a buy point of 182.49. Shares broke out after the Google search giant announced a development in quantum computing on Dec. 10 with a new quantum chip called Willow. The stock has also formed a three-weeks-tight pattern with a 201.42 buy point.
The Magnificent Seven leader holds impressive ratings as well, with both an EPS and Composite Rating of 97 and a Relative Strength Rating of 86. The MFS Growth Fund (MFEGX) holds shares of Google stock. Alphabet's sales have ranged between 13% and 15% over the last four quarters. Earnings growth has ranged between 28% and 53%.
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