2 Best Dow Jones Stocks to Supercharge Your Returns in 2025
Sunday, Nov 17, 2024 6:41 am ET
7min read As the Dow Jones Industrial Average (DJIA) continues to set record highs, investors are looking for stocks that can outperform the broader market in the coming years. Two companies stand out as potential powerhouses in 2025: Amazon (AMZN) and Nvidia (NVDA). Both stocks have strong fundamentals and are well-positioned to capitalize on emerging trends in the tech and AI sectors.
Amazon's AWS business and AI initiatives drive its growth potential in 2025. Amazon Web Services (AWS) is the largest enterprise cloud service provider, contributing a small portion of Amazon's annual revenue but generating most of its operating profit. With AWS revenue growing 19% year over year in the third quarter of 2024, Amazon enters 2025 with strong momentum. The company's trailing 12-month free cash flow more than doubled year over year to $47 billion, thanks in part to accelerating growth from AWS and cost savings initiatives in its retail business. AWS continues to roll out new AI tools for customers, claiming it has released more machine-learning and generative AI features than other cloud leaders. Amazon's long-term earnings growth estimate, based on Wall Street estimates, ranks third among Dow Jones stocks, with a consensus estimate of 21% per year over the next several years. This positions Amazon shares to outperform the Dow Jones in 2025 and beyond.
Nvidia's AI chip leadership and innovation play a crucial role in its expected outperformance in 2025. The company holds about 80% of the AI chip market and is set to launch its most powerful chip ever, Blackwell, which is expected to generate billions in revenue. Nvidia's focus on updating its top-performing chips annually ensures it stays ahead of the competition, maintaining robust revenue growth. Additionally, the shortage of AI chips and leading cloud service providers' need for more computing capacity will continue to benefit Nvidia. With a market share of about 80% in the AI chip market, Nvidia's Blackwell chips, designed to handle the most demanding AI workloads, are expected to drive revenue growth in 2025 and beyond. The company's strong financial health, with more cash, cash equivalents, and marketable securities than debt on its balance sheet, enables it to invest in innovation and maintain robust revenue growth. Analysts expect Nvidia to report annualized earnings growth of 35%, ranking among the top of the Dow Jones.
In conclusion, Amazon and Nvidia are well-positioned to outperform other Dow Jones stocks in 2025, thanks to their strong fundamentals and strategic initiatives in the tech and AI sectors. Investors seeking to supercharge their returns should consider these two stocks as potential additions to their portfolios. As always, it is essential to conduct thorough research and consult with a financial advisor before making any investment decisions.
Amazon's AWS business and AI initiatives drive its growth potential in 2025. Amazon Web Services (AWS) is the largest enterprise cloud service provider, contributing a small portion of Amazon's annual revenue but generating most of its operating profit. With AWS revenue growing 19% year over year in the third quarter of 2024, Amazon enters 2025 with strong momentum. The company's trailing 12-month free cash flow more than doubled year over year to $47 billion, thanks in part to accelerating growth from AWS and cost savings initiatives in its retail business. AWS continues to roll out new AI tools for customers, claiming it has released more machine-learning and generative AI features than other cloud leaders. Amazon's long-term earnings growth estimate, based on Wall Street estimates, ranks third among Dow Jones stocks, with a consensus estimate of 21% per year over the next several years. This positions Amazon shares to outperform the Dow Jones in 2025 and beyond.
Nvidia's AI chip leadership and innovation play a crucial role in its expected outperformance in 2025. The company holds about 80% of the AI chip market and is set to launch its most powerful chip ever, Blackwell, which is expected to generate billions in revenue. Nvidia's focus on updating its top-performing chips annually ensures it stays ahead of the competition, maintaining robust revenue growth. Additionally, the shortage of AI chips and leading cloud service providers' need for more computing capacity will continue to benefit Nvidia. With a market share of about 80% in the AI chip market, Nvidia's Blackwell chips, designed to handle the most demanding AI workloads, are expected to drive revenue growth in 2025 and beyond. The company's strong financial health, with more cash, cash equivalents, and marketable securities than debt on its balance sheet, enables it to invest in innovation and maintain robust revenue growth. Analysts expect Nvidia to report annualized earnings growth of 35%, ranking among the top of the Dow Jones.
NVDA Revenue By Business
In conclusion, Amazon and Nvidia are well-positioned to outperform other Dow Jones stocks in 2025, thanks to their strong fundamentals and strategic initiatives in the tech and AI sectors. Investors seeking to supercharge their returns should consider these two stocks as potential additions to their portfolios. As always, it is essential to conduct thorough research and consult with a financial advisor before making any investment decisions.
