Evercore ISI gives its top five tech picks for 2025
Evercore ISI already named its favorite technology stocks to own heading into 2025. As a group, information technology is up nearly 32% year to date, one of the top-performing sectors in the S & P 500. Large cap tech stocks in particular have been at the forefront of the equity rally since late 2022, when the artificial intelligence chatbot ChatGPT debuted. More recently, however, the IT sector has come under pressure amid questions as to whether tech companies will continue to see the growth needed to justify their lofty valuations. Against that background, Evercore ISI analysts recently picked five tech stocks they’re most sure of entering next year. Here are the investment bank’s stock picks, and where the recommendations are forecast to head next. Arista Networks The cloud network equipment company’s conservative revenue guidance for 2025 leaves room for upside potential, according to Evercore ISI. “We think ANET is uniquely positioned to deliver revenue acceleration in CY25 and beyond driven by multiple levers,” a group of analysts wrote in a Wednesday note. According to their forecasts, Arista Networks’ revenue will grow by more than 20% in 2025 and 2026. They cited tailwinds such as customer expansion, growth across its front-end network and Cognitive campus workspaces service . The company’s back-end AI offerings are another potential driver of revenue growth, according to the analysts. “We continue to see Arista as the leader in AI ethernet switching and customer adoption should accelerate in CY25,” the note continued. Evercore ISI raised its 12-month price target on Arista to $450 from $425, indicating more than 20% upside from Friday’s close. The stock has surged 59% year to date. Apple Artificial intelligence will power Apple ‘s long-term growth story, according to Evercore ISI. Although sales for its new iPhone released in September haven’t sparked an upgrade supercycle, the investment bank believes iPhone growth will eventually improve as more AI features are added. “While this may be disappointing for those hoping for a very strong iPhone 16 cycle, we think it is important to note that Apple’s AI strategy goes beyond simply selling more iPhones,” the analysts said. “Apple will continue to function as a gatekeeper to it’s 1.5B+ [user] install base and has the optionality to monetize 3rd party AI efforts. This will enable them to reap the AI rewards without the massive uptick in capex we are seeing at their mega cap peers.” In addition to benefits from more AI features, Apple’s services and wearables segments are also expected to grow next year. Evercore ISI has an unchanged $250 price target, which implies shares gaining 11.1% from where the stock closed Friday. Apple shares are up 17% in 2024, lagging the 23% gain in the S & P 500. Amphenol The fiber optic connector manufacturer offers both double-digit revenue growth and low volatility, according to Evercore ISI’s analysts. Amphenol also produces electronic connectors and cables which it sells across a diverse range of markets, including to defense, tech and broadband companies. Amphenol is also expected to benefit as some of its customers, such as industrial and mobile networks groups, recover. The Wallingford, Connecticut-based company also has a strong track record in acquisitions and a solid balance sheet ensuring it can continue deal-making — which Evercore ISI estimates could add from 15 cents to 20 cents to its earnings per share on an annual basis. The stock closed at $70.52 on Friday. “We think APH is well-positioned to benefit from AI ramps by providing highly complex/efficient connectors for AI servers and networking,” the Evercore analysts wrote. “Additionally, APH’s deep exposure over a range of technology and strong partnerships allow[s] them to be flexible in reacting and capturing short and long-term AI opportunities,” the note said. Evercore ISI increased its price target on the $90-billion stock by $5 to $80 per share, or more than 13% above Friday’s close. International Business Machines IBM is likely to top revenue estimates in 2025, Evercore ISI said. Growth in IBM’s software segment, which reached double digits in the third quarter, will likely continue thanks to high demand for AI and data solutions. IBM currently has $3 billion worth of AI business booked, which could also boost demand for its software offerings, Evercore ISI said. IBM may also gain from President-elect Donald Trump’s second term push to lift regulations. “A more favorable regulatory backdrop for M & A could accelerate deal activity,” Evercore ISI wrote. “IBM notably could be positioned for larger transactions given their balance sheet” and free cash flow generation. Vertiv Holdings Vertiv Holdings is a long-term beneficiary of the AI boom, Evercore ISI said. The Waterville, Ohio company’s 27,000 employees provide digital infrastructure technologies to data centers. Shares have more than doubled in 2024, soaring 152% in 2024 amid the boom in data centers that’s driven demand for Vertiv’s liquid cooling technologies. “We think the company is well-positioned to not just capture secular tailwind AI infrastructure tailwinds, but also gain share in an expanding market, and more importantly, do so in an increasingly more profitable manner,” the Evercore note said. The analysts believe Vertiv’s profit margins before interest and taxes could reach the mid 20% level as it optimizes scale and business processes. The bank lifted its price target to $150 from $135, implying Vertiv shares might rally 24% over the next year compared to where they closed on Friday. —CNBC’s Michael Bloom contributed to this report.
#Evercore #ISI #top #tech #picks