The Dow Jones Industrial Average (^DJI 0.94%) index, which includes the 30 most prominent companies in the U.S., is used by some as a benchmark of the American economy. Over the past 10 years, the Dow advanced about 135%, even as the COVID-19 pandemic, inflation, rising interest rates, and other macro headwinds rattled the markets.
Also, over that decade, some well-known companies, including General Electric, ExxonMobil, Pfizer, and Intel, were removed from the index and replaced by higher-growth companies, including Amazon, Salesforce, and Nvidia.
But despite those occasional changes, the Dow remains a good starting point for seeking out some promising long-term investments. Today, I'll look at two of those stocks -- Apple (AAPL -0.17%) and Cisco Systems (CSCO 1.16%) -- and explain why they're set to soar in 2025 and beyond.
Image source: Getty Images.
Apple
Apple's stock has slumped about 20% since the beginning of the year. The bulls shunned the tech titan for four main reasons. First, the Trump administration's unpredictable tariffs, especially against China, could cause its production costs to soar. Second, Apple's AI efforts failed to impress investors as much as OpenAI's ChatGPT and other generative AI platforms. Third, its closely watched mixed reality efforts fizzled out after it halted its production of the Vision Pro.
Lastly, Fortnite publisher Epic Games won a major legal victory against Apple after a U.S. court ruled that the company could bypass its App Store fees with other payment methods. That victory could allow other developers to bypass Apple's 30% fees with a similar payment measure. All of those challenges -- along with Warren Buffett's decision to trim Berkshire Hathaway's big stake in Apple over the past year -- weighed down its stock.
Yet investors are overlooking some of Apple's long-term strengths. It ended its latest quarter with $133 billion in cash and marketable securities, which gives it ample room for fresh investments and acquisitions. It has an installed device base of over 2.2 billion, and it's already locked in over a billion paid subscriptions across all of its services. It could leverage that massive audience to justify its App Store fees as it appeals the Epic Games ruling.
Apple's brand appeal, the stickiness of its ecosystem, and its high switching costs should continue to drive its future sales of iPhones, Macs, iPads, and other devices. Its rollout of new custom chips, its integration of new AI features, and a more affordable version of the Vision Pro -- which might arrive in 2026 or 2027 -- could keep it ahead of its Android-based rivals. As for the tariffs, it could mitigate those impacts by shifting its supply chains to lower-tariff countries like India or Vietnam.
From fiscal 2024, which ended last September, to fiscal 2027, analysts expect Apple's earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 12%. Its stock still looks reasonably valued at 26 times next year's earnings, and it should head higher once it resolves its near-term issues.
Cisco Systems
Cisco's stock has risen about 6% this year. Investors warmed up to the world's top networking hardware and software company as its growth stabilized and fresh catalysts appeared on the horizon. It struggled in fiscal 2024, which ended last July, as its customers placed too many hardware orders after its previous supply constraints eased in fiscal 2023. A challenging macro environment then drove those customers to deploy those devices at a slower-than-expected rate -- so Cisco's shipments abruptly dried up.
But over the past year, Cisco's hardware sales stabilized as the market's demand finally caught up with its inventories again. It also expanded its observability segment by acquiring Splunk last March, and it's been expanding its cybersecurity business with new AI-powered services such as Hypershield and AI Defense. Moreover, its AI-related infrastructure business continued to expand and generated $1.35 billion in revenue in the first nine months of fiscal 2025. That accounted for 3% of its revenue during those three quarters and easily surpassed its prior goal for generating $1 billion in AI infrastructure revenue for the full fiscal year.
Cisco will probably never become a hypergrowth AI play like Nvidia, yet it provides the essential building blocks for the growing data center, cloud, and AI markets. With $15.6 billion in cash and marketable securities at the end of its latest quarter, it still has plenty of room to expand its higher-growth businesses and maintain its buybacks, which cancelled out over a fifth of its shares over the past decade, for years to come. From fiscal 2024 to fiscal 2027, analysts expect Cisco's EPS to grow at a CAGR of 9% -- and its stock still isn't expensive at 22 times next year's earnings. Simply put, it could head a lot higher over the next few years as its core markets expand.
