We’re less than 8 weeks away from the year’s end, and Wall Street’s analysts are starting up with their annual hobby – choosing the top picks for the year ahead. While no one has a crystal ball to show just what next year will bring, some trends are clear. The tech stocks are likely to keep driving gains in the markets, and AI will continue to be a major driver for the tech companies.
The 5-star analysts at Mizuho are following this line of thought – and they’re turning to the Magnificent 7, the tech mega-cap stocks at the top of Wall Street’s pyramid, to find the top stock picks for 2025.
Right now, they’re looking at Nvidia (NASDAQ:NVDA) and Amazon (NASDAQ:AMZN), the leaders in AI-capable semiconductors and online retail, respectively.
We’ve opened up the TipRanks database to get a broad-picture view of both of these stocks, looking at their recent performance as well as dipping into their statistics. Here are the results, presented along with comments from the Mizuho analysts.
Nvidia
Nvidia isn’t just the largest company on Wall Street with a remarkable $3.6 trillion market cap; it’s practically rewriting the playbook for tech stocks. The numbers tell a story of meteoric growth: year-to-date, shares are up 198%, the past three years show an astounding 386% climb, and over five years, Nvidia has soared by an unimaginable 2,750%. Nvidia’s gains are a direct reflection of the importance of semiconductor chips in the digital economy – and especially of the company’s leadership in the field of AI-capable chips.
Nvidia got into the AI business through its leadership in GPU, graphic processing units that were originally designed as high-capacity chips capable of handling the demands of graphic-heavy applications. In recent years, these chips have also been used to power AI applications and their supporting data center server systems, and are vital in the high-speed computing sector. The company has reaped solid benefits from the boom in AI tech – the applications, the expansion of data centers, and related expansions in high-speed and cloud computing – and in its last fiscal year, 2024, which ended on January 28 of this calendar year, Nvidia reported revenues of $60.9 billion, up 126% from fiscal year 2023.
Earlier this year, Nvidia faced a headwind when it announced production delays for its most advanced chips, featuring the Blackwell architecture. The company is now expected to begin deliveries of this much anticipated series in January of next year, and industry watchers are eager to see the new tech. Nvidia already has orders from such major AI developers and users as Meta and Microsoft. The upcoming deliveries bode well for Nvidia, and the company expects the new chipset to outsell its older – but still popular – Hopper lines.
Nvidia will release its earnings for fiscal 3Q25 next week, but a look back at the fiscal Q2 results will show us where the company stands now. In the second fiscal quarter, Nvidia reported revenues of $30 billion, for a company record – and a figure that was up 122% year-over-year and beat the forecast by $1.31 billion. The firm’s bottom line, the 68-cent non-GAAP EPS, was up 152% y/y and beat the estimates by 4 cents per share. The conventional wisdom is expecting to see the company post fiscal Q3 revenues of $32.94 billion.
For Mizuho analyst Vijay Rakesh, who holds a 5-star rating from TipRanks, the main point here is that Nvidia dominates the market for AI-capable chips – and that it is likely to keep dominating that market going forward.
“NVDA remains the dominant AI/data center accelerator player with strong 90%+ market share, well ahead of main competitors AMD, which is ramping MI300, and Intel, which is shipping Gaudi2/ramping Gaudi3. We see AI server penetration growing to >10% by 2027E from ~1% in 2023 and NVDA continuing to dominate with solid roadmap execution with Blackwell driving 2.5-6x performance improvements with ASPs up just 25-30% over Hopper, as NVDA sees Gen AI as a $100T market with greenfield projects from customers driving $250B of investments per year, as well as $250B of brownfield investments,” Rakesh opined.
To this end, Rakesh rates Nvidia shares as Outperform (i.e. Buy), with a $165 price target, implying a ~14% upside from current levels.
And he’s in good company. Nvidia’s 41 recent analyst reviews add up to a Strong Buy consensus, with a 38-3 tilt in favor of Buys over Holds. However, the $157.27 average price target implies a more conservative 7% upside over the coming year. (See NVDA stock forecast)
Amazon
Next up, Amazon, leads the pack in online retail. The company is a proven survivor; it was founded in 1994, survived the dot.com bubble, and has built itself into the world’s largest e-commerce company – and it hasn’t stopped there. While its core business remains online retail, Amazon also has its hands in cloud computing and AI, providing a wealth of services to subscribing customers.
Amazon’s AWS, first launched 22 years ago, has become one of the cloud computing industry’s leaders, competing with the likes of Google Cloud and Microsoft’s Azure. AWS offers its users a wide array of cloud-based platforms and interfaces, along with computing and data tools, backed up by Amazon’s servers. The service is available by subscription, and requires no complex infrastructure on the user’s end; this has made AWS particularly popular with small businesses, although it is inherently scalable and has made strong inroads with individual, enterprise, and even government customers. AWS is becoming an important revenue driver for Amazon as a whole, and generated over $90 billion in 2023.
The cloud service is one beneficiary of Amazon’s moves into AI. Amazon is using AI to support and improve the cloud-based tools offered on AWS, and to improve its online retail core. The Mag 7 giant has provided backing to the generative-AI firm Anthropic – as much as $4 billion in backing – and is using Anthropic’s family of gen-AI models in its own cloud-based AI platform, Bedrock. Like AWS, Bedrock will offer users the advantage of advanced computing – AI, in this case – without the need to host advanced servers. Amazon is building on the trust and name recognition it has built up with AWS to promote its moves into the AI subscription model.
In fact, Amazon already has a number of AI tools online, as customer-facing enhancements of its retail business. These include Amazon’s new shopping assistant, Rufus, available in Canada and the UK as well as in some areas of Europe, and a set of new AI Shopping Guides, designed to ease the process of searching Amazon’s retail site. By pursuing AI as both a subscription platform and an in-site retail tool, Amazon is showing that it intends to develop the full potential of the tech for its business.
These efforts, and the core retail business, continue to bear fruit. Amazon reported $158.9 billion worth of revenue in its recent 3Q24 financial results. This result was up 11% year-over-year and was $1.6 billion ahead of the forecast. The revenues included $27.5 billion in AWS revenue, which was up, as a segment, 19% year-over-year. Amazon’s bottom line, the $1.43 EPS, was 29 cents per share better than had been expected.
All of this, but especially the strength in AWS and AI, has impressed Mizuho’s James Lee, a 5-star analyst rated in the top 4% of the Street’s stock pros.
“We believe AWS’ strong ecosystem and marketplace approach for Gen-AI are not fully appreciated by investors. We expect Gen-AI to drive the next super cycle of cloud migration as the adoption could accelerate from 20% of workloads currently on cloud to 70% in 5 years vs. prior estimate of 10 years. That said, we believe that AWS is well positioned to benefit structurally given its strength on data warehousing and solutions,” Lee commented.
Not surprisingly, Lee rates AMZN shares as Outperform (i.e. Buy), with a $240 price target that suggests a potential 15% gain over the next year. (To watch Lee’s track record, click here)
All in all, Amazon has 45 recent analyst reviews on file, and these have a lopsided split of 44 Buys to just 1 Hold, for a Strong Buy consensus rating. AMZN shares are currently trading for $208.33 and have an average price target of $238.35, which is practically the same as Lee’s. (See AMZN stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
