Best Tech Stocks for January 2025

These are some of the best tech stocks based on best value, fastest growth, and most momentum

The Fed dampened hopes for a Santa Claus rally in tech stocks by announcing a smaller-than-expected rate cut for December and signaling a hawkish stance for the coming year. On Dec. 18, Fed Chairman Jerome Powell emphasized that the Fed was moving slowly in the face of uncertainty during the transition to a new presidency. The Technology Select Sector SPDR Fund (XLK) index dropped 3.2% on the day as market expectations shifted.

Below is an analysis of the top tech stocks for January 2025, screened for best value, fastest growth, and most momentum. All stocks are listed on the Nasdaq or New York Stock Exchange.

We also excluded stocks with a price under $5, an average daily trading volume of less than 100,000, and a market cap of less than $300 million.

All data are current as of Dec. 18, 2024.

Best-Value Tech Stocks

Value investing is an investing strategy that holds that investors can identify stocks trading below their true value. At the time the market corrects this mispricing, these undervalued names may increase in value. Investors typically attempt to identify undervalued stocks using fundamental metrics like the price-to-earnings (P/E) ratio. Typically, a lower P/E ratio signals an undervalued stock because it means the company is valued less than its fundamental value. These stocks may offer a stronger return after the market adjusts.

• i3 Verticals, Inc.: i3 Verticals specializes in developing and acquiring software solutions for the public sector and health care markets. Approximately 80% of its revenue is recurring, generated from software, services, and transaction-based payment processing integrated into its proprietary platform. The company complements organic growth with disciplined acquisitions, having completed 50 since 2012.
• Yalla Group Limited: Yalla operates two flagship mobile apps—Yalla, a voice-centric group chat platform, and Yalla Ludo, a casual gaming app featuring popular Middle East and North Africa (MENA) board games with in-game voice chat and localized features. Yalla was the largest MENA-based online social networking and gaming company by revenue in 2022, attracting over 36.2 million monthly users and 11.9 million paying users by late 2023. As of third quarter 2024, Yalla reported 40 million active monthly users.
• StoneCo Ltd.: Operating primarily in Brazil, StoneCo provides financial technology and software solutions designed to help merchants streamline multi-channel commerce and drive business growth. StoneCo reported a 6.9% year-over-year revenue increase in third quarter 2024, driven by growth in its financial services segment, higher client monetization, and record take rates.

Fastest-Growing Tech Stocks

Growth investors believe that increases in a company’s revenue and earnings per share (EPS) can be an indicator of a strong business that has the potential to increase in value. However, focusing on just one of these two metrics can give an incomplete picture of a company’s growth potential. Circumstances unrelated to a company’s fundamental business strength—such as tax law changes, mergers, or one-off gains—can skew these figures on their own.

Investopedia uses a dual-metric approach to reach a more balanced assessment of growth companies. We equally weight the latest year-over-year (YOY) percentage growth for both EPS and revenue. This approach aims to reduce the impact of those one-time anomalies to provide a better view of a company’s true growth pattern and potential. Additionally, any companies with growth in excess of 1,000% are excluded as outliers.

• MakeMyTrip Limited: MakeMyTrip Limited is India’s leading travel group, operating well-known brands like MakeMyTrip, Goibibo, and redBus. The company offers a comprehensive platform for travelers to research, plan, and book a wide range of travel services, including flights, hotels, and holiday packages. Revenue for the quarter ending Sept. 30 increased by 25.1% to $211.0 million, driven by strong growth across all business segments and robust travel demand in India.
• Duolingo, Inc: Duolingo is the world’s leading mobile learning platform and the top-grossing app in the Education category on Google Play and the Apple App Store. Known for its quirky marketing, Duolingo announced a partnership on Dec. 18 with Netflix’s Squid Game to promote Korean language learning through an immersive campaign titled “Learn Korean or Else.”
• ODDITY Tech Ltd.: Leveraging an AI-driven platform and advanced data science, ODDITY identifies consumer needs and creates innovative beauty and wellness products for its 50 million users. ODDITY reported strong third quarter 2024 results, with net revenue of $119 million (up 26% year-over-year), and adjusted EBITDA of $25 million, driven by strong consumer demand for its direct-to-consumer model and high-performance products.

Tech Stocks With the Most Momentum

Momentum investing is a strategy aiming to capitalize on pre-existing market trends by focusing on stocks that have outpaced their peers or the broader market on returns. This investment principal holds that stocks on an upward path are likely to continue to outperform, as long as fundamental aspects of the business, industry, or sector do not change.

Momentum investing is a common strategy applied to tech stocks because they regularly experience significant market disruptions. As companies launch new products, announce technological breakthroughs, and gain rapid popularity, investors have the potential to climb on board while these stocks are still ascending.

Here are the tech stocks with the highest total return in the last 12 months.

• Quantum Computing Inc.: Quantum Computing’s strategy focuses on delivering accessible and affordable quantum machines to commercial and government markets, based on its proprietary Entropy Quantum Computing (EQC) technology for superior performance and low power consumption. The company hopes to use its products to capture market share in high-performance computing, artificial intelligence (AI), cyber security, and remote sensing applications.
• Sezzle, Inc.: A buy-now-pay-later fintech company, Sezzle provides interest-free installment payment plans for online and select in-store purchases. The launch of a new banking program and improved operating efficiency contributed to record third-quarter operating income of $20.8 million and net income of $15.4 million, reflecting significant profitability growth.
• Red Cat Holdings, Inc.: Red Cat is a drone technology company specializing in advanced hardware and software solutions for military, government, and commercial use. For 2025, the company is projecting revenues of $80 to $120 million.

Advantages of Tech Stocks

Growth potential

Tech stocks, particularly those in emerging areas, are known for experiencing some of the sharpest growth of any publicly traded company. Anticipating this, investors have sought periods in which the sector underperforms to invest heavily, as they expect significant growth over the long term.

But growth among tech stocks can vary dramatically. Many of the larger firms have limited growth potential because their market saturation and capitalization are already very high. Small-cap or penny tech stocks that experience technological breakthroughs or suddenly become incredibly popular may have periods of massive growth. Unusually, some of the biggest names in tech—including Amazon.com Inc. (AMZN), Meta Platforms Inc. (META), and Alphabet Inc. (GOOGL)—have continued to grow at significant rates.

Advanced innovation

Tech trends are always changing, with companies aiming to capitalize on the latest technology and to guide and follow developments in innovation. This makes the sector primed for breakthroughs. One of the most recent major trends to sweep the tech sector has been AI-related technologies, which are increasingly integrated into companies across many industries and sectors. To the extent that some tech companies continue to play a role in making this possible, they stand to benefit from the ongoing AI trend.

Disadvantages of Tech Stocks

Fluctuations in the tech sector

Tech stocks are known for their high volatility, where rapid technological changes and competitive pressures can lead to significant price fluctuations. They often carry high valuations based on growth expectations, making them susceptible to market corrections if they fail to meet these projections. Furthermore, regulatory challenges and geopolitical tensions can impact the sector, introducing additional risks and uncertainties for investors.

Trends shift quickly

The sharp gains of many tech firms can prove tempting to investors who may not be well-versed in the technologies themselves. With rapid innovation characterizing the sector, trends and prospects shift very quickly as well. Investors who are unprepared for this pace or who lack knowledge of the fundamental strengths of different tech companies may find themselves following a trend that has already changed.

Advantages

• Growth potential

• Advanced innovation

Disadvantages

• Tech sector turbulence and rich valuations

• Investors may be left behind with rapidly shifting trends

The Bottom Line

The tech sector’s performance in 2024 is poised to be significantly influenced by advancements in AI, which is expected to drive long-term growth. The adoption of AI, along with ongoing digitization and cloud computing, offers promising opportunities, particularly for companies involved in semiconductor production and cloud software services.  However, the macroeconomic environment will also play a key role in determining the sector’s short-term performance, with the potential for volatility depending on interest-rate policies and economic conditions​.

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As of the date this article was written, the author does not own any of the above securities.