AI stocks were the straw that stirred the drink on Wall Street in 2024 and there is every reason to believe that trend will continue in 2025. Numerous investors have profited from this but Goldman analysts believe the S&P 500 Index is set to experience slow growth next year. If you're looking for more upside potential, analysts believe these two stocks could outperform Goldman's S&P 500 expectations by several hundred percent in 2025.
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AMD (NASDAQ: AMD)
Advanced Micro Devices was one of the first major chipmakers to establish roots in what would eventually become Silicon Valley. This company has been producing graphics processing units (GPUs) and computer processing units (CPUs) since the late 1960s, when "advanced" computers took up entire rooms. Despite its long history, AMD has been overtaken by several competitors, most notably Nvidia.
Nvidia's dominance is largely due to its ability to supply high-performance chips that allow tech companies to maximize their AI capabilities. However, AI's appetite for data is so vast that opportunities still exist for AMD. According to Barchart, AMD's sales are up 10% in the last 12 months. AMD continued that momentum with its Q3 2024 earnings, which saw gross profits increase by 19% over Q3 2023.
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AMD's earnings per share (EPS) of $0.47 also significantly outpaced Q3 2023's $0.18. AMD shares are currently trading at $120.10, but many analysts see significant potential upside. Notably, Goldman Sachs isn't the only investment house pegging AMD for a big 2025. Benzinga's survey of 30 analysts shows a consensus price target of $195 for AMD, which leaves 63% upside potential. That blows away the 7% growth Goldman predicts for the S&P 500.
SYNOPSIS (NASDAQ: SNPS)
Synopsis is one of the many companies that have thrived in the ecosystem created by AI's emergence as a force in business and technology. Rather than make chips like AMD or Nvidia, Synopsis creates technology that allows developers to design and test computer chips. This technology is important because it enables semiconductor manufacturers and chipmakers to ensure their chips can handle the workload AI will place on them.
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As hyperscale data centers and other AI applications become more advanced, chipmakers will rely even more on companies like Synopsis to help with quality control. The importance of hyperscale data centers in AI development also means that Synopsis should have a large client base for the foreseeable future. Synopsis earnings per share (EPS) and revenue have beaten analysts' expectations for seven of the last eight quarters.
Synopsis shares are trading at $492.18, but analysts significantly agree that this stock is primed for a big 2025. Benzinga surveyed 20 analysts, whose consensus price target for Synopsis is $580.32. However, the most recent ratings from Piper-Sandler, Baird and Rosenblatt see Synopsis stock settling between $630 and $655. That's about a 30% upside, which dwarfs Goldman's single-digit growth expectations for the S&P 500 in 2025.
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