Transcription
Let's talk about the top seven stocks for 2025.
As always, I'm not about to hold you hostage in this video. The bottom line always comes first; the analysis comes second. I value your time, and I don't need the extra ad money by holding you for another two or three minutes on a video you don't want to watch.
I've made a lot of money over the past few years by investing in Palantir, Tesla, and the S&P 500, which makes me kind of not care about ad revenue on YouTube.
Now, look, the list is very simple. I'm giving it away in the beginning of the video. Yes, I'm not lying. The list is: write it down—AMD, Google, Nvidia, Tesla, Palantir, Amazon, and Meta—in no particular order. The order was absolutely random, in case you're wondering.
First of all, I hope everybody had a relaxing and enjoyable New Year's with your family and loved ones. We obviously had to bail out Grandpa again on New Year's, but that's already par for the course. The police department knows, so everything is good.
Now, let's start right away because I like to go straight to the point. So, let's start with the first name I just dropped: AMD.
Now, look, AMD is probably one of the most misunderstood stocks in the market. I know it's not great; I know it has problems, but it is absolutely misunderstood. It lacks all the hype and the hoopla that stocks like Nvidia, Palantir, and some other names like MicroStrategy have. It's not a hype name right now, and that's exactly why I'm interested. I like stocks that are beaten down, stocks that are not hyped up.
I just want to remind you that I was excited about Palantir at $6 when nobody was thinking that was a good bet. Right now, you're getting AMD at a 23.4 forward PE. That's not expensive. Below 24 PE for a company of this sort is actually quite interesting.
Why? Well, look, Nvidia is basically the gold standard of the industry as far as data centers go. That is true. Broadcom is probably second, and AMD is a distant third. However, it is currently being priced as if it has already died, as if Broadcom and mostly Nvidia have taken 100% of the market.
Now, as I'm about to show you, that is never close to being true. While AMD is far behind—too far, which is a strategic mistake—they're not dead in the water yet. In fact, quite the opposite. They are about to carve out a piece of the market for themselves.
You see, unlike Nvidia and even Broadcom, AMD does not need to be number one in the market as far as data centers go. It just needs a piece of the pie. It's not as big, so for this stock to do very well, it just needs to be a part of the game.
Now, AMD is definitely behind, no doubt, but it's not over. You see, as far as the data center market goes, it's massive. You just heard Oracle founder CEO Larry Ellison talk about the fact that he was begging Jensen to give him some more chips. Nvidia is currently not just a monopoly; they're basically a drug dealer. Everybody wants what they have.
They either don't have the capacity to sell it to people because there's so much demand and just a limited amount of pieces they can churn out every quarter, but also the price is insane because of the high demand.
If you look at the market and say, "Well, look, a lot of these companies will need chips," not everybody can pay Nvidia prices, and there's just not enough for all the other demand in the market.
So, if you look at the capacity and the fact that AMD can give you a cheaper product and also solve a lot of problems, and you've also looked at the AMD track record, they went up against Intel and actually not just carved a piece of that market; they basically killed Intel.
So, AMD has been there before. The market needs a cheaper alternative, and it generally needs another player in this data center business. Again, AMD does not need to be number one, nor do they aim for that, but if they solve the problem of price and capacity, they will generate some income, and it's actually already happening.
This is what most analysts are not telling you. Look at AMD right now. Last year, AMD did $7 billion of revenue from data centers. This year, according to management guidance, they're about to double that and generate about $14 billion.
So, even though the numbers are not insane—this is not Nvidia numbers—but they don't have to be. The fact of the matter is AMD is about to double their income from data centers, which means they don't need the massive amount of sales Nvidia is generating to grow.
Net income over the past 12 months grew from $200 million to $1.8 billion. That's an 800% increase, while at the same time, operating expenses went down by 1.5%, which is incredibly insane and good if you think about it.
While operating income went from $90 million to $1.4 billion, at the same time, debt went down by 40% in the last 12 months. Currently, AMD has $4.5 billion in cash and $1.7 billion in debt, which is a setup I absolutely love: lots of cash, not a lot of debt, and the net income margin just goes up and up and up.
The company is generating sales; they're not dead at all. In fact, they're getting better. Now, according to my own DCF, the current price of the share should be $155 based on the data that I have in front of me.
I look at the market right now, and the market is pricing the stock at $122, which means AMD currently has a 26% upside. Now, that's not a huge number, but again, we're playing the smart game here. We're not going for shitcoins; we're going for well-established companies with great fundamentals, and AMD at this price is definitely interesting.
Now, if you look at my five-year pricing model, the bear case I have at $131, and the mid-case is $199. My five-year bullish price target for AMD is $237. Very, very interesting.
Now, let's move on to Google. Google is actually trading at a 21.5 forward PE, even lower than AMD, with a 31% operating margin. They have great margins; they're an advertising monster. 80% of their business is advertising right now. The margins are insane, and they have one of the cleanest, most beautiful-looking balance sheets in tech.
Their Google Cloud business is expanding, YouTube is growing, and AI is definitely becoming a thing with Google. They're definitely behind, but they're getting up, and they have a massive cash pile.
Now, the reason why Google lagged the tech industry, I think, is because of a lot of regulatory pressures. But I think with the new administration, with President Trump, and what I think will be with the FTC and the whole policy of going after big tech going away, I think those regulatory pressures on Google will alleviate, if not go away at all.
Another thing that people feared is that the policy of the Fed is going to cause a recession, and then the first thing to go in a recession is advertising budgets, which is bad for Google. But recession fears are basically over. Soft landing confirmed; inflation went away, so it looks good for Google on all fronts.
If you look at their position right now, they hold $100 billion in cash, $11 billion in debt, and they've reduced their debt over the past 12 months by 60%. Net income, almost $100 billion, grew 41% over the past 12 months, while operating expenses to generate all this extra money only went up by 3.6%. That is incredible.
Now, my DCF price target for Google today is $228 versus the current price of $190, which is a 19.5% upside. My five-year price targets are: bear case $222, mid-case $279, and bull case $333. It's a low-risk, low-reward, but it's a smart play, and it actually can surprise you to the upside.
Now, let's talk about Nvidia. Nvidia has a lot pricier than Google, with a 324 PE. It's not horrible, but it's not as cheap. But look at the operating margins: 63%. That is insane. A lot of people say, "Well, these margins will go away because of the cycle of all the adoption of the infrastructure." No, no, no, no, no. Nvidia has always had high margins; this isn't new.
If you look at the history of Nvidia, they have always had high margins. The H100s right now are the new industry standard. They have the best software for AI data centers; they have a huge moat. Plus, you get the gaming segment pretty much for free at this point.
There are a lot of high expectations, sure. There's cyclicality ahead, sure. There's competition ahead, sure. But when? Not in the next few years; it's not anytime soon.
So, with $35 billion of cash and only $10 billion of debt, and it's actually been reducing debt by 9% over the past 12 months, with $53 billion of net income—which is a 400% increase from the past 12 months—with revenue increasing by 200% over the past year and operating expenses only up 30% to give you these incredible numbers, this is a really, really good, solid company.
Not an expensive valuation, and shockingly, Nvidia is not that pricey. Now, my DCF valuation I currently have at $175 versus the current price of $136, which means a 28% upside today. My five-year price target for Nvidia is: bear case $190, mid-case $297, and bull case $445. Don't sleep on Nvidia; many have before, and many have been punished for that.
Now, Amazon has a 36 forward PE. You got to buy for the AWS business, not the retail business. The retail business has horrible margins and no upside. The AWS is where the money is at—massive growth, massive margins.
Net income currently at $50 billion while only increasing operating expenses by 4.2%. Again, you're seeing a trend here. I like companies that can grow and scale without spending more money for all this extra revenue. Free cash flow is $43 billion, up 150% over the past 12 months.
My DCF value right now for me is $287 versus the current price of $222. That's a 29% upside on Amazon. My five-year price targets are: bear case $278, mid-case $391, and bull case $554.
Now, let's talk about Meta. Meta is just a monster; it's a behemoth. I'll show you in a second. Now, the forward PE is only 23.6, which is incredible to me, given the fact that you're looking at a company that's pretty much monopolizing the advertising industry along with Google.
They have a 40.7% operating margin, $55 billion of net income, which grew 86% over the past 12 months. Again, you have to look at this company beyond just Facebook. You have to look at the ecosystem: WhatsApp, Instagram, all the social media networks. You have to look at the cheap ROI advertising solutions they provide that nobody can compete with.
It's a fortress financially as far as the balance sheet goes. Look, the numbers are insane: $70 billion cash on $28 billion of debt, but the debt has decreased by 20% over the past 12 months.
That's why my current DCF price target for this is $680, up 14% from the current market price of $598. My five-year targets are: bear case $978, mid-case $1,513, and bull case $2,048 in five years, which is incredible.
Again, these are not predictions; these are valuations and estimates.
Now, I haven't mentioned two other stocks on this list, which are Tesla and Palantir. That is because I've made countless videos giving you my valuations and price targets. But if you want it today, it's very simple: I think Palantir is going to go to $500, which is something I said when the stock was $6, and people laughed at me. Not laughing anymore.
I think Tesla is a $1,400 stock. Again, very much undervalued despite all the hoopla around it right now. I get it; all the haters just want to hate, or sometimes people just missed out and feel bad, and they have to punch holes in the bull thesis. It's okay; it's not for everyone.
I'm not going to reanalyze Tesla and Palantir here; I've done it before many, many times. You have to understand there's no guarantees in this business. I mean, anything can happen. A lot of this can just be me being wrong, which has happened before. I'm not God; I make mistakes. I'm just a human being.
We can have geopolitics basically throw a monkey wrench into this. We can have a crisis, a recession, a stock market crash—millions of things can happen that can derail this train.
But based on what I'm seeing today, these seven stocks, I'm really excited about, and I think they're worth your time to research.
But I do want you to pay attention to what I just said: research, not buy it because some idiot on YouTube told you he's excited about these stocks. Do the work, which basically means three simple principles: learn how to save more money, how to invest longer, and how to pick better.
If you do these three things, you will be fine. If you want to get better at this, if you want more of this analysis, if you want to learn the skills to do this yourself and get better at this long term, join our Academy, Roy Academy. We have a few spots left at patreon.com/nash.
Would love to see you there. I'll see you next time. Peace!