2025: BATMMAAN and Undervalued Nvidia Shine

Published Date : 07/01/2025 

In the ever-evolving world of tech stocks, one name stands out: Nvidia. Despite tripling in price over the past year, it remains the most undervalued among the BATMMAAN stocks. Here’s why Nvidia is the $1 trillion stock to watch in 2025. 

Large tech stocks have been the darlings of the market in recent years.

Investors have coined terms like FANG, FAANG, and the 'Magnificent Seven' to group the biggest and fastest-growing technology names.

After a remarkable 2024, where the tech-heavy Nasdaq Composite index surged by 28%, the outlook for 2025 seems a bit more uncertain.

However, the BATMMAAN stocks—Broadcom, Apple, Tesla, Microsoft, Meta Platforms, Alphabet, Amazon, and Nvidia—are expected to continue outpacing expectations.

The Best Way to Value Growth StocksValuing tech stocks can be tricky.

Investors bid shares higher based on potential future growth, often before revenues and earnings have materialized.

The BATMMAAN stocks have bright outlooks for 2025, driven by trends in artificial intelligence (AI), robotics, computing power, and autonomous vehicles.

However, their stock valuations already reflect this optimism.

The most comprehensive way to identify undervalued growth stocks is by comparing estimated earnings growth to the stock's forward price-to-earnings (P/E) ratio.

If the P/E-to-growth (PEG) ratio is below 1, it suggests the earnings growth rate is expected to outpace the valuation investors have assigned to the stock.

The table below shows the PEG ratios for the BATMMAAN stocks, with Nvidia standing out as the only one with a PEG ratio below 1.

| Company | Market Cap ($ in trillions) | 2025 Earnings Growth | 2025 PEG Ratio ||-----------------|------------------------------|------------------------|------------------|| Apple | $3.68 | 19% | 1.8 || Nvidia | $3.54 | 52% | 0.6 || Microsoft | $3.15 | 13% | 2.3 || Alphabet | $2.36 | 12% | 1.8 || Amazon | $2.36 | 25% | 1.4 || Meta Platforms | $1.53 | 12% | 1.9 || Tesla | $1.32 | 37% | 3.2 || Broadcom | $1.09 | 28% | 1.3 |

Market Cap as of 1/3/25; Ratios and growth based on calendar year estimates.

A Diverse Group of Tech BusinessesEach of these companies has a unique avenue for growth.

Apple relies on iPhone sales to keep adding users to its ecosystem, which integrates with other consumer products and services.

Amazon's consumer e-commerce business remains a major contributor to its revenue, but Amazon Web Services' (AWS) cloud computing services are increasingly important.

AWS has helped Amazon shares rise by 55% over the past year, and analysts expect earnings to rise by another 25% in 2025.

Microsoft also has a rapidly growing cloud storage segment with Azure, and it integrates retail computer offerings with related services.

Meta Platforms relies on recurring subscription and advertising revenue from its social media platforms, while also driving growth in augmented reality (AR) and virtual reality (VR) products.

Meta shares have jumped nearly 75% in the past 12 months.

Tesla is perhaps the most diverse company in this group.

Its valuation extends beyond its position as the leading global electric vehicle (EV) company.

Tesla is collecting data from its EVs to improve self-driving software and aims to launch a fleet of autonomous robotaxis.

It also has a growing energy storage segment and an increasingly discussed robotics division with Optimus humanoid robots.

AI Ties It All TogetherThese companies are heavily investing to increase compute power.

Data centers used for cloud storage are no longer enough; now, they need data centers dedicated to developing large language models and other AI functions.

Nvidia is the leading provider of advanced semiconductor chips for this purpose.

The company recently launched the powerful Blackwell graphics processing units (GPUs) and plans to roll out the next-generation system, Rubin, next year.

Broadcom provides networking and software solutions for these data centers.

Its shares jumped by more than 120% last year as investors increasingly recognize its role in the growing AI ecosystem.

However, much of the spending is directed towards Nvidia.

Microsoft President Brad Smith recently stated that the company expects to invest $80 billion in its fiscal 2025 for AI-enabled data centers used to train models.

This investment has already translated into revenue and earnings for Nvidia, and the company’s growth is expected to continue in 2025.

Why Nvidia is a Good BetThe PEG ratio is a useful tool for finding undervalued growth stocks.

Forward estimates need to be realized, or the stock will be punished.

However, managing this risk, Nvidia looks like a good bet heading into the new year.

Despite tripling in price over the past year, Nvidia remains the most undervalued among the BATMMAAN stocks, making it a compelling investment opportunity. 

Frequently Asked Questions (FAQS):

Q: What are BATMMAAN stocks?

A: BATMMAAN stocks refer to Broadcom, Apple, Tesla, Microsoft, Meta Platforms, Alphabet, Amazon, and Nvidia. These are the largest and fastest-growing technology companies, each with a market cap over $1 trillion.

Q: What is a PEG ratio, and why is it important?

A: The P/E-to-growth (PEG) ratio compares a stock's price-to-earnings (P/E) ratio to its earnings growth rate. A PEG ratio below 1 suggests the stock is undervalued, as the earnings growth rate is expected to outpace the valuation investors have assigned to the stock.

Q: How does Nvidia stand out among BATMMAAN stocks?

A: Nvidia stands out because it has the lowest PEG ratio among the BATMMAAN stocks, indicating it is undervalued. Despite tripling in price over the past year, it is expected to continue growing due to its leading role in AI and advanced semiconductor chips.

Q: What are the key trends driving growth in tech stocks in 2025?

A: Key trends driving growth in tech stocks in 2025 include advancements in artificial intelligence (AI), robotics, computing power, and autonomous vehicles. Companies are heavily investing in these areas to stay competitive and innovative.

Q: How is Nvidia contributing to the AI ecosystem?

A: Nvidia is the leading provider of advanced semiconductor chips, particularly graphics processing units (GPUs), which are crucial for developing large language models and other AI functions. Nvidia's Blackwell and Rubin architectures are examples of its ongoing contributions to the AI ecosystem. 

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