The technology sector is home to some of the market's best-performing growth stocks. The tech-heavy Nasdaq Composite index has more than doubled in the last five years, but with artificial intelligence (AI) attracting lots of interest from Fortune 500 corporations, there are still attractive opportunities for long-term investors.
Wall Street analysts see substantial upside potential this year for Advanced Micro Devices (AMD +3.61%) and Monday.com (MNDY 2.08%).
1. Advanced Micro Devices
The growing use of AI software is driving massive investments in advanced hardware for data centers. Training AI models requires powerful graphics processing units (GPUs), which has generated incredible revenue growth for chipmaker AMD over the last year. Wall Street analysts' average 12-month price target on AMD shares is $183. That's 52% higher than its $120 share price at the time of this writing.
NASDAQ: AMD
Key Data Points
Revenue from AMD's data center business jumped 122% year over year in Q3 to $3.5 billion. Major data center operators including Microsoft and Meta Platforms are strategic partners with AMD, positioning it for robust growth in the coming years as data center capacity is built to support AI workloads.
AMD management has put an enormous figure on this opportunity: It estimates the market for AI accelerators could reach $500 billion by 2028.
AMD is also a leading supplier of other types of hardware, including central processing units (CPUs), where it has been taking market share away from Intel in recent years. AMD's client segment, which includes its CPUs for PCs, experienced strong growth, with revenue up 29% year over year in Q3.
Analysts on average expect AMD's total revenue to grow by 27% in 2025 to $32 billion, according to Yahoo! Finance. Higher margins from sales of advanced AI chips are expected to push its earnings up 54%, yet investors can buy shares today at a forward price-to-earnings ratio of just 24.
Strong earnings growth could send AMD shares toward Wall Street's price target over the next year.
2. Monday.com
Monday.com has emerged as a top supplier of work management software. Businesses are choosing its cloud-based platform to automate tasks, build new applications, and help teams more efficiently collaborate on projects. The company offers its platform on a subscription basis, which has helped grow revenue from $161 million in 2020 to $906 million on a trailing-12-month basis.
With another strong year of growth expected in 2025, analysts have an average price target of $319 on the shares, 35% above their recent $235 price.
NASDAQ: MNDY
Key Data Points
There are a lot of vendors competing in the market for this type of software, but Monday.com is still growing revenue by more than 30% year over year, and is approaching $1 billion in annual sales.
It's telling about Monday's competitive position that even after a recent price increase, it has continued to see strong demand for its platform. The company is further protecting its position by continuing to launch new features, including a new AI-powered assistant that is seeing strong adoption.
Profitability is also starting to improve as the company scales. After reporting net losses in recent years, net income improved to nearly $22 million over the last four quarters.
The stock is up 25% over the last 12 months, but it still trades around the same price-to-sales multiple of 13. For the stock to climb by 35% to Wall Street's consensus 12-month price target, the company will need to either beat the consensus revenue estimates in 2025, or its P/S multiple will have to increase.
Assuming Monday.com keeps trading at around the same valuation it carries now, it should continue to climb in line with its revenue growth. Given that analysts' average expectation is for its revenue to rise 26% in 2025, that would still be an excellent return.
