2 stocks that could rise in 2025 according to this value

Nvidia (NASDAQ: NVDA) and Meta platforms (NASDAQ: META) they have skyrocketed this year. But these companies are benefiting from strong trends in data center spending and digital advertising that could push their stock prices to new highs in 2025.

These stocks are trading at relatively low forward price-to-earnings (P/E) ratios compared to Wall Street’s 2025 earnings estimates, which could create another monster for investors next year. Here’s how I can ship these stocks.

1. Nvidia

Nvidia continues to report phenomenal growth as data centers shift from traditional computing to accelerated computing systems to handle artificial intelligence (AI) workloads. Demand for the company’s graphics processing units (GPUs) has been off the charts, sending the stock up 161% over the past year.

The stock’s forward price is 28 based on next year’s earnings estimate, which is too low given the Wall Street estimate calling for 40% earnings growth next year and 36% over the next few years. The stock currently trades at a trailing 12-month earnings P/E of 53. If the stock trades at the same P/E and Nvidia remains on track to meet next year’s earnings estimate, the stock price could climb above $200.

The stock has retreated over the past month amid concerns over the delay of Nvidia’s new Blackwell computing platform. But demand trends look very favorable. Management expects to start generating revenue from Blackwell in the fourth quarter, and this will add to demand for the current generation chip.

Importantly, management indicated a variety of workloads driving growth in its data center business. Customers purchase their hardware for training and inference of generative AI models, in addition to developing cutting-edge AI models. Demand is coming from consumer internet services and thousands of start-ups building AI applications in healthcare, advertising and education.

Nvidia stock was trading at a similar P/E in December, before the stock doubled in 2024. The current valuation suggests it could repeat that performance again as it launches Blackwell.

2. Meta Platforms

Digital advertising is a growing share of total ad spending, and this continues to fuel growth for Meta Platforms, the owner of Facebook. The social media stock is up more than 80% over the past 12 months, but still trades at a very attractive valuation that can support more gains in 2025.

Meta shares trade at a forward P/E of 22 relative to next year’s earnings estimates. This is well below Meta’s average P/E over the past 10 years of 38. The stock could rise as much as 50% if the stock’s P/E closes some of that gap. Analysts expect Meta’s earnings to grow at an annual rate of 17% over the long term, justifying a higher P/E.

The story continues

Meta has a long track record for growth in digital advertising, and the company’s investments in AI will help unlock that potential. In early 2023, Meta announced Llama, a large language model that can interpret a string of words to complete a text. It has already released Llama version 3.1, which has an impact on its revenue growth.

Llama is the technology behind Meta AI, a personal assistant that has improved the user experience on Meta’s social media platforms. Meta AI drives higher user engagement and increases advertising revenue. Meta’s revenue grew 22% year-over-year in Q2.

Given the growth opportunity, Meta plans to invest heavily in AI infrastructure. Meta is a very profitable business with $49 billion in free cash flow. It can afford to invest aggressively in AI and gain a technological edge. Given these upsides, the stock appears conservatively valued and deserves a higher valuation.

Should you invest $1,000 in Nvidia right now?

Before buying Nvidia stock, consider the following:

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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. John Ballard has positions in Meta Platforms and Nvidia. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.

2 stocks that could rise in 2025, according to this stock originally published by The Motley Fool