A new year will be upon us in less than a month, and investors are thinking about how they want to invest during 2025. Trends can change quickly, which is why the most important factor in making a decision about any investment should always be its underlying fundamentals.
If you’re looking for excellent stocks that are also benefiting from strong tailwinds right now, Amazon(NASDAQ: AMZN), SoFi Technologies(NASDAQ: SOFI), and Carnival(NYSE: CCL)(NYSE: CUK) would be great picks.
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Amazon is leading innovation in artificial intelligence (AI). Ever since it unveiled its AI technology two years ago, it has remained at the forefront of the revolution, launching a large selection of services for Amazon Web Services (AWS) clients and even developing its own graphics processing units (GPUs) to compete with Nvidia‘s.
Business is booming. Not only is the AI business itself already producing billions of dollars in revenue, but the AWS platform is attracting new clients who want to use Amazon’s AI services. CEO Andy Jassy has emphasized his view that this is just the beginning, noting that 90% of global IT spending still goes toward on-premises systems, while 10% goes to the cloud. He expects those proportions to flip over the long haul. Amazon is positioned to enjoy windfall gains as that shift happens.
Amazon is using AI throughout its business, such as offering generative AI solutions like product descriptions based on prompts for third-party sellers and data analytics for advertising clients. These services are elevating the entire enterprise.
It’s not easy for a megacap company to achieve double-digit percentage revenue growth, but Amazon continues to demonstrate robust growth. It’s also highly profitable. It has incredible long-term opportunities, but 2025 could be particularly strong as the AI trend drives it forward.
For SoFi, the driving trend will be falling interest rates. SoFi stock was down for most of this year because of pressure on its core lending business. But lower interest rates are helping the lending segment, and the rest of its business is already in fantastic shape.
Several years ago, SoFi developed a strategy to increase engagement through cross-selling and upselling, and it acquired Golden Pacific Bancorp to get a banking charter. It now has three business segments: lending, financial services, and tech platform.
The lending segment still accounts for more than half of total revenue and most of the company’s profits, and its growth is accelerating again. Its revenue increased 14% in the third quarter, and contribution profit was up by 17%.
Financial services is the standout segment and includes non-lending services like bank accounts and investments. Revenue from that unit increased 102% year over year in the quarter, while contribution profit improved from $3 million to $100 million. Tech platform is a white-label business-to-business platform; its revenue was up 14% in the quarter, with contribution profit up 2%.
On a consolidated basis, SoFi has reported four straight quarters of positive net income, and management is guiding for that to continue into 2025. With strong engagement, hundreds of thousands of new customers, and now a reignited lending business, SoFi stock could be a standout performer in 2025.
Carnival’s tailwind is lower inflation, although it’s also benefiting from lower interest rates. Carnival has made a huge comeback after having to shut down its operations for more than a year during the pandemic, but it continues to see unprecedented demand that seems like more than a rebound.
However, it’s still recovering from that hiatus in two crucial ways. It hasn’t yet had a full year of positive net income since 2019, and it has a huge amount of debt to pay off after taking out loans to stay in business while it was unable to generate revenue.
Profitability is improving. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 25% year over year to $2.8 billion in its fiscal 2024 third quarter, which ended Aug. 31. Management also raised its guidance. It now anticipates a 40% adjusted EBITDA increase for the fiscal year. Operating income increased by $554 million in the quarter to $2.2 billion, and the company reported $1.7 billion in net income. Wall Street is looking for earnings per share of $1.33 for 2024.
As for the debt, Carnival still has nearly $30 billion, but it has been paying it down efficiently, and lower interest rates should make that process easier. With inflation largely back in check, people should have more money to spend on expensive cruise tickets, and Carnival is coming into 2025 in its best-ever booked position, with more than half of its inventory sold out for the year. It’s already seeing these trends continue into 2026 bookings.
As demand for cruises remains strong, Carnival is well-positioned to move toward a full recovery in 2025, and the stock should reflect that journey.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil has positions in SoFi Technologies. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.
