Zacks Investment Ideas feature highlights: Cadence Design Systems, Nvidia, Arista Networks Microsoft and Meta

For Immediate ReleaseChicago, IL – December 31, 2024 – Today, Zacks Investment Ideas feature highlights Cadence Design Systems, Inc. CDNS, Nvidia NVDA, Arista Networks ANET, Microsoft MSFT and Meta META.2 Top Tech Stocks to Buy in 2025 for Long-Term AI Growth (CDNS, ANET)Stocks will likely go on sale at some point in early 2025 following the 2024 rally and a massive two-year run that saw the Nasdaq soar over 90%. Now is a great time to add to your watchlist and pay attention to key levels of strong stocks to take advantage of the next major stock market pullback.Stocks and indexes can only climb unimpeded for so long before they experience healthy recalibrations to reset valuation levels, shake off the froth, and more. Corrections (drops of 10% to 19% from a peak) and pullbacks are regular events that the best investors and Wall Street giants take advantage of.   The Nasdaq dropped 1.5% on Friday sending it back under its 21-day moving average following the pre-Christmas rally. The tech-heavy index hasn’t fallen below its 50-day since early September, the last time it flirted with its 200-day.Long-term investors should lock-in on the 50-day and the 200-day for the S&P 500, the Nasdaq, and their favorite stocks as key levels to start buying into.  The next stock market downturn should be bought up quickly given the outlook for earnings growth in 2025 and 2026. Meanwhile, the backdrop for slower Fed interest rate cuts indicates that the U.S. economy remains sturdy.The expected pro-growth and lower tax backdrop of the second Trump administration provide additional stock market fuel.Now let’s dive into two great stocks for investors to buy as soon as they go on sale in 2025.Why This Tech Stock is a Must-Buy in 2025Cadence Design Systems, Inc. stock has soared roughly 5,000% in the last 15 years to destroy the Tech sector’s 625% and its Computer–Software industry’s 975%.Wall Street has flocked to Cadence Design Systems because its modeling and computational software are essential cogs the in lifecycle of semiconductors and other vital technologies.CDNS underperformed the Tech sector and the market in 2024, setting up a potentially attractive entry point for investors in 2025.The growing complexity of semiconductors needed for artificial intelligence (AI), hyperscale computing, and beyond transformed Cadence into an invaluable partner for many chip companies.Nvidia and other giants depend on Cadence's simulation tech before their cutting-edge semiconductors they are made. The electronic systems design leader averaged 14% revenue growth in the trailing five years.Cadence is projected to grow its revenue by 13% in 2024 and 2025 (adding over $1 billion to the top line between FY23 and FY25) to help boost its adjusted EPS by 15% and 16%, respectively.Cadence’s 2025 and 2026 earnings estimates faded this year, leading to its underperformance.Wall Street has paid a premium for the computational software company for years, with CDNS sitting at 55.2X forward 12-month earnings vs. Tech’s 27.8X. Yet, Cadence trades at a 25% discount to its highs in P/E terms while Tech is 5% below its peaks.Cadence’s steady growth is coveted on Wall Street, with 13 of the 17 brokerage recommendations Zacks has at “Strong Buys.”Cadence was range-bound in 2024. CDNS trades 7% below its highs and around its February 2024 levels. The next time CDNS tests its 50-day or 200-day the stock might start to rally and break out to new all-time highs.Why Arista Networks is a Great Big Data and AI Stock to BuyArista Networks is a client-to-cloud networking powerhouse, concentrating on large AI, data center, campus, and routing environments. ANET’s networking infrastructure has expanded rapidly over the past decade alongside cloud computing and the big data explosion. The AI revolution is the newest gust of wind on ANET’s sails.Arista Networks boasts over 8,000 cloud customers worldwide, including some Magnificent 7 tech companies. Microsoft and Meta are two of ANET’s largest clients. Arista Networks said last year that “cloud titans” accounted for 46% of its revenue.Microsoft and Meta have grown to rely heavily on Arista Networks for their big data growth and AI dreams.Wall Street views ANET’s growing relationship with Microsoft and Meta as a long-term vote of confidence in Arista Networks, and 13 of the 19 brokerage recommendations Zacks has are “Strong Buys.”ANET grew its revenue from $361 million in 2013 to $5.86 billion last year, averaging 37% sales growth over the past three years. Arista Networks is projected to boost its sales by 19% in FY24 and 17% in 2025 to reach $8.15 billion.The networking infrastructure firm is projected to grow its adjusted earnings by 26% and 10%, respectively, following 52% EPS expansion in FY23. ANET’s improving EPS estimates help Arista Networks earn a Zacks Rank #2 (Buy) and its topped our quarterly estimates for five years in a row.Arista Networks has an impressive balance sheet, with $7.4 billion in cash and equivalents against $3.6 billion in total liabilities and zero debt.This backdrop has helped ANET stock skyrocket roughly 2,800% in the past 10 years, leaving Meta’s 670% and Microsoft’s 820% runs in the dust. ANET’s Tech-crushing performance includes a 92% run in 2024.Arista Networks has never been a value stock and its always traded at a premium to Tech. ANET’s price per share is now far more attainable to many investors after it completed its 4-for-1 stock split in early December. Still, Arista Networks appears due for a recalibration since it trades near its all-time highs in terms of forward earnings. Any slide down to ANET’s 50-day, or better yet, its 200-day moving average would mark a screaming buying opportunity for the tech stock.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks