Evercore ISI says one corner of the technology sector contains three stocks that should be staples of your portfolio in 2025. Analyst Amit Daryanani said in a mid-December report that he was generally optimistic about the IT hardware and networking sectors heading into the new year. That includes a number of stocks that could benefit from the artificial intelligence boom. “Going into 2025, we expect the appeal of enterprise artificial intelligence to increase, and the recovery in cyclical IT spending to expand across the technology stack,” the report said. The outlook includes a group of “AAA” stocks that investors can buy once and for all , which includes several companies expected to outperform the S&P 500 in 2024. Milestone is up more than 34% this year. Daryanani wrote that a “long-tail upgrade cycle” and additional profit opportunities in areas such as wearables and Apple smarts should continue to push shares of the Tim Cook-led company higher. Wall Street analysts are generally bullish on Apple, although their price targets suggest the stock could trade sideways or even decline over the next 12 months. One of the less high-profile stocks Evercore is focusing on is under-the-radar Amphenol, which makes connectors and cables for industries including mobile networking and automotive. Evercore expects Amfen’s earnings per share to rise 10% or more next year, citing potential M&A activity, upside in artificial intelligence and a cyclical recovery in the industry. “APH can maintain double-digit revenue growth and mid-single-digit EPS growth with high consistency and low volatility,” the report said. The stock has less consensus than Apple. According to LSEG, of the 20 analysts covering Amphenol, 11 have a Strong Buy or Buy rating and 9 have a Neutral rating. By 2024, Amphenol’s stock price will rise 44%, outperforming Apple and the Nasdaq. However, Amphenol isn’t the best-performing company in AAA’s portfolio. The hottest stock on the list is Arista Networks, which has nearly doubled in 2024. The excitement brought about by artificial intelligence. “Ethernet for AI data centers should start to accelerate, and we expect revenue growth to reach more than 20% in 2025 and 2026,” the report said. Similar to Apple, Arista Networks has the support of most Wall Street analysts Buy and Strong Buy ratings, but the average price target actually implies a decline for the stock in 2025, according to LSEG.
