The technology sector is projected to experience significant growth in 2025, with worldwide IT spending expected to reach approximately $5.61 trillion, marking a 10% increase from 2024. Key drivers of this growth include substantial investments in artificial intelligence (AI) and cloud services, as businesses seek to enhance their operational efficiencies and capabilities. A number of industry experts anticipate that spending on AI-optimized servers will double compared to traditional servers, reflecting the ongoing demand for advanced computing infrastructure.
Indeed, investors should be aware that while the tech sector remains robust, challenges such as rising costs may impact real spending growth. Many companies are expected to allocate budgets primarily to offset these price increases rather than expand their technological capabilities significantly. Additionally, the focus on AI will continue to dominate capital expenditures, particularly among major cloud service providers.
Knowing the tech sector is going for a successful year ahead, here are three stocks to own for a start on February.
Amazon (NASDAQ:AMZN) is perhaps one of the world’s most recognizable companies, with its e-commerce business dominating the mind share of most consumers and investors. However, the company’s operations are divided between its North America and international e-commerce arms and its AWS segment, driving cloud and AI efforts. In the first nine months of 2024, Amazon generated $450 billion in revenue, with $171 billion (38%) from online stores, growing just 6%. Double-digit growth in third-party seller services, advertising, and subscriptions offset the company’s more modest e-commerce growth.
In contrast, Amazon’s North America and international segments earned $18 billion in operating income, with margins of 5.8% and 2.5%, respectively. This suggests online stores may operate at a loss to bolster its more profitable, tech-focused ventures.
Amazon’s AWS segment delivered $79 billion in revenue in the first nine months of 2024, growing 20% and comprising 18% of total revenue. However, it generated $29 billion in operating income (62% of Amazon’s total), achieving a 37% operating margin. This highlights Amazon’s success as a collection of smaller, high-performing businesses driving substantial growth despite its scale.
OpenText (NASDAQ:OTEX) presents a compelling case as a tech stock to consider in 2025, driven by several strategic initiatives and market dynamics. The company is focusing heavily on artificial intelligence (AI) and cloud solutions, which are critical for its growth trajectory. In the first quarter of fiscal 2025, OpenText reported revenues of $1.27 billion, despite a year-over-year decline of 11%, highlighting challenges in a competitive landscape dominated by giants like Microsoft and IBM.
Moreover, OpenText’s commitment to returning value to shareholders is evident through its attractive dividend yield of approximately 3.7% and ongoing share buybacks. Analysts project a recovery in earnings, anticipating adjusted earnings per share to rise from $3.66 in fiscal 2025 to $4.60 by 2027.
Furthermore, the average price target for OTEX is set at $34.00, suggesting significant upside potential from its current trading levels around $28.33. With a focus on AI-driven product innovations and strategic partnerships, OpenText is well-positioned to enhance its market share and financial performance in the coming years, making it a stock worth monitoring closely in 2025.
Nvidia (NASDAQ:NVDA) has become the leading provider of high-performance AI GPUs, essential for training and running AI models. Its dominance in AI infrastructure has driven significant demand, leading to consistent double- and triple-digit revenue growth in recent years. With gross margins exceeding 70%, Nvidia has proven highly profitable amid the ongoing AI boom.
The AI company’s focus on innovation, including annual chip updates, strengthens its competitive edge. The launch of its customizable Blackwell architecture is projected to generate $9 billion in revenue by early next year, surpassing earlier estimates. Upcoming releases like the Rubin AI architecture and its comprehensive AI product portfolio, including software tools for business applications, could further boost Nvidia’s growth and stock performance.
Nvidia’s growth extends beyond AI, with a $1 trillion opportunity in accelerated computing as data centers shift to faster, energy-efficient systems. Other prospects like cloud gaming add to its long-term potential. At 33 times forward earnings, it remains an attractive investment.
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