Future Trends Indicate a Nasdaq Surge in 2025. Two Top Tech Stocks Worth Investing in Prior to This Upturn.
Rolling into the new year, investors are taking stock and giving thanks for the market's performance. The Nasdaq Composite, a leading index, gained a whopping 29% last year, following its 43% surge in 2023. Fear of a market downturn seems unfounded, as history suggests the market might continue to climb higher in 2025.
In such a market, two tech stocks stand out as potential investments: PayPal and Shopify.
PayPal: The Phoenix Reborn
After pioneering the digital payment industry, PayPal (PYPL) encountered hard times. Slowing sales, tough comps, and economic headwinds took their toll. But the Phoenix has risen. It's on the road to recovery, as its third-quarter results demonstrate.
Revenue climbed 6% to $7.8 billion, driving EPS up 22% to $1.20. Total payment volume increased 9%, while transactions per active account skyrocketed 9%. The company's active account base expanded by 3 million sequentially, and transactions per active account jumped a significant 9%.
PayPal's future looks hopeful with initiatives like PayPal Everywhere, a more attractive rewards program and branded debit card, expanding transaction margin in 2025, and strategic partnerships with fintech companies. Wall Street is bullish on PayPal, with price targets ranging from $94 to $125.
Shopify: Back from the Brink
Like PayPal, Shopify (SHOP) enjoyed a surge of activity during pandemic times but then faced tough comps, a rapid decline in digital retail, and economic downturn. However, the rebounding economy has freed up disposable income, benefiting digital retailers and resulting in a resurgence for Shopify.
In the third quarter, revenue increased 26% to $2.16 billion, driving operating income of $283 million, up 132%. Shopify's free cash flow margin grew to 19%. Merchants big and small have flocked to Shopify's innovative tools, including Shopify Flow.
Shopify Flow's use of artificial intelligence (AI) to suggest replies to customer inquiries, automate customer loyalty programs, manage inventory, and review orders for immediate fulfillment or review has proven invaluable for merchants. These initiatives have lifted the company's stock price by 32% in the past year.
In a nutshell, two tech stocks are poised to soar in a market that seems primed for further growth. PayPal and Shopify have shown remarkable resilience and innovation, positioning themselves for the economic recovery and growth expected in 2025.
Investors looking to allocate their money in the finance sector might consider investing in PayPal or Shopify, given their strong performances and promising future prospects. With predictions suggesting that the market might continue to climb higher in 2025, these tech stocks could potentially yield significant gains.
PayPal's third-quarter results showcased a turnaround, with revenue and earnings per share both increasing significantly. The company's initiatives like PayPal Everywhere, a more attractive rewards program, and strategic partnerships with fintech companies have potential to further boost its transaction margin in 2025.
Shopify, on the other hand, has bounced back from challenges posed by tough comps and economic downturn. The resurgence of digital retail and the rebounding economy have benefited the company, leading to a 26% increase in revenue and a significant growth in free cash flow margin. Shopify Flow, its AI-powered tool, has been a game-changer, automating customer service and managing inventory for merchants, helping to lift the company's stock price by 32% in the past year.
Prevention of potential market downturns should always be a priority for investors. Instead of simply reacting to market fluctuations, proactive investing strategies that consider companies with a proven track record of resilience and innovation, like PayPal and Shopify, can help mitigate risks and potentially secure above-average returns.
