Fed’s Hawkish Stance Shakes Tech Stocks; Top Picks for January 2025

News 20 Jan 2025

The Federal Reserve dashed expectations for a year-end rally in tech stocks by announcing a smaller-than-expected December rate cut and signaling a hawkish stance for 2025. Fed Chairman Jerome Powell emphasized a cautious approach amid economic uncertainty. Following the announcement on Dec. 18, the Technology Select Sector SPDR Fund (XLK) index fell 3.2%.

Top Tech Stocks to Watch in January 2025

Here’s a breakdown of tech stocks categorized by best value, fastest growth, and most momentum. Only stocks listed on the Nasdaq or NYSE, priced above $5, with a market cap over $300 million, were included.

Best-Value Tech Stocks

Value stocks are identified based on low price-to-earnings (P/E) ratios, signaling potential undervaluation.

Stock	Price ($)	Market Cap ($B)	P/E Ratio
i3 Verticals, Inc. (IIIV)	22.4	0.75	4.8
Yalla Group Ltd. (YALA)	4.2	0.7	5.7
StoneCo Ltd. (STNE)	8.0	2.4	6.6

i3 Verticals, Inc. focuses on software solutions for the healthcare and public sectors, generating 80% recurring revenue.
Yalla Group Ltd. dominates MENA’s social networking and gaming markets with 40M active users.
StoneCo Ltd. supports Brazilian merchants with fintech solutions, reporting a 6.9% revenue boost in Q3 2024.

Fastest-Growing Tech Stocks

These stocks show rapid growth in earnings per share (EPS) and revenue.

Stock	Price ($)	Market Cap ($B)	EPS Growth (%)	Revenue Growth (%)
MakeMyTrip Ltd. (MMYT)	111.8	12.3	755	25
Duolingo, Inc. (DUOL)	332.8	14.6	714	40
ODDITY Tech Ltd. (ODD)	46.3	2.6	232	26

MakeMyTrip Ltd. saw 25% growth in travel services, driven by India’s travel boom.
Duolingo, Inc. leads mobile learning with quirky campaigns like its partnership with Netflix’s Squid Game.
ODDITY Tech Ltd. uses AI to develop innovative beauty products, achieving $119M in Q3 revenue.

Tech Stocks With the Most Momentum

Momentum stocks exhibit significant 12-month total returns.

Stock	Price ($)	Market Cap ($B)	12-Month Return (%)
Quantum Computing Inc. (QUBT)	25.7	3.0	2,818
Sezzle, Inc. (SEZL)	242.2	1.4	1,531
Red Cat Holdings, Inc. (RCAT)	8.15	0.65	1,236

Quantum Computing Inc. aims to make quantum tech accessible for AI and cybersecurity.
Sezzle, Inc. excels in buy-now-pay-later services with record profitability.
Red Cat Holdings, Inc. develops advanced drones for military and commercial use.

Pros and Cons of Tech Stocks

Advantages:

Growth Potential: Emerging tech often experiences rapid growth.
Innovation: Constant breakthroughs in AI, cloud computing, and more.

Disadvantages:

Volatility: Rapid changes in trends can lead to unpredictable fluctuations.
Regulatory Risks: Geopolitical tensions and policies can impact valuations.

The Bottom Line

Tech stocks remain a high-potential sector, with advancements in AI and digitization driving long-term growth. However, the Fed’s cautious approach may introduce short-term volatility. Investors should weigh opportunities against risks in this rapidly evolving space.

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