3 High-PE Tech Stocks Worth the Premium in 2025
The tech industry is seeing substantial growth due to increasing global demand and the rapid adoption of digital technologies. The market is expected to continue capturing attention in the future, driven by innovations such as AI, which are transforming the lives of organizations and consumers alike.
Therefore, investors could consider looking into high P/E tech stocks, Amazon.com, Inc. (AMZN), ServiceNow, Inc. (NOW), and Motorola Solutions, Inc. (MSI), which are worth the premium in 2025.
The increasing need to modernize processes, improve customer experiences, and stay competitive in the digital age has fueled significant demand for tech solutions. As organizations seek to leverage technologies like cloud computing, artificial intelligence, and data analytics to enhance efficiency and innovation, the tech market continues to grow, supported by the imperative of digital transformation.
Spending on software is expected to increase 14% to $1.23 trillion in 2025, up from 11.7% growth in 2024. Meanwhile, IT services are expected to grow 9.4% to $1.73 trillion in 2025, up from 5.6% in 2024. Therefore, the global information technology market is projected to grow at a CAGR of 11% by 2032.
Considering these conducive trends, the fact that these are popular and well-established tech names, and their growth prospects, their premium valuation might be justified. Let’s examine the three best tech stocks in detail:
Amazon.com, Inc. (AMZN)
AMZN engages in the retail sale of consumer products and subscriptions through online and physical stores in North America and internationally. It operates through three segments: North America, International, and Amazon Web Services (AWS). The company’s products offered through its stores include merchandise and content purchased for resale and products offered by third-party sellers.
On December 2, 2024, AMZN and Comcast announced that Comcast had migrated its 5G wireless core to AWS’s cloud infrastructure, enabling scalable, secure, and cost-effective 5G services for Xfinity Mobile and Comcast Business Mobile customers across the United States, with improved innovation and network performance.
On the same date, AMZN announced new generative AI enhancements for Amazon Connect, aimed at improving customer service through proactive outreach, personalized self-service, and AI-powered agent evaluations. These features help businesses enhance customer experiences while reducing operational costs.
In terms of forward non-GAAP P/E, AMZN is trading at 43.30x, 147.4% higher than the industry average of 17.50x. Likewise, the stock’s forward EV/Sales multiple of 3.77 is 191.4% higher than the industry average of 1.29.
AMZN’s total net sales for the fiscal third quarter, which ended on September 30, 2024, rose 11% year-over-year to $158.88 billion. The company’s operating income was $17.41 billion, up 55.6% year-over-year. Additionally, the company’s net income and EPS were $15.33 billion and $1.43, respectively, reflecting increases of 55.2% and 52.1% from the year-ago values.
Street expects AMZN’s EPS and revenue for the quarter ended December 31, 2024, to increase 47.8% and 10.2% year-over-year to $1.48 and $187.26 billion, respectively. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 49% to close the last trading session at $222.13.
AMZN’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
AMZN has an A grade for Sentiment and a B for Growth, Momentum, and Quality. It is ranked #14 out of 49 stocks in the A-rated Internet industry. Beyond what we have stated above, we also have given AMZN grades for Value and Stability. Get all the AMZN’s ratings here.
ServiceNow, Inc. (NOW)
NOW provides end-to-end intelligent workflow automation platform solutions for digital businesses in North America, Europe, the Middle East and Africa, Asia Pacific, and internationally.
On December 3, 2024, NOW announced an expanded strategic collaboration with new capabilities to accelerate AI-driven business transformation across every corner of the enterprise. A new connector enables the seamless use of multimodal models developed and trained on Amazon Bedrock for GenAI-powered workflows in the Now Platform.
In terms of forward non-GAAP P/E, NOW is trading at 75.81x, which is 198% higher than the industry average of 25.44x. Also, its forward EV/EBITDA multiple of 55.46 is 253.8% lower than the industry average of 15.68.
During the fiscal third quarter that ended September 30, 2024, NOW’s non-GAAP total revenues increased 22% year-over-year to $2.79 billion. Its non-GAAP income from operations grew 31% from the year-ago value to $872 million. In addition, the company’s non-GAAP net income and non-GAAP EPS came in at $775 million and $3.72.
Analysts expect NOW’s EPS and revenue for the fourth quarter ended December 31, 2024, to increase 17.4% and 21.6% year-over-year to $3.65 and $2.96 billion, respectively. It surpassed Street EPS and revenue estimates in each of the trailing four quarters, which is promising.
Shares of NOW have gained 13.8% over the past three months to close the last trading session at $1049.08.
NOW’s POWR Ratings reflect robust prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. NOW has a B in Growth, Momentum, Sentiment, and Quality. It is ranked #12 out of 40 stocks in the B-rated Software – Business industry.
Beyond what we have stated above, we also have given NOW grades for Value and Stability. Get all the NOW’s ratings here.
Motorola Solutions, Inc. (MSI)
MSI provides public safety and enterprise security solutions in the United States, the United Kingdom, Canada, and internationally. The company operates in two segments: Products and Systems Integration and Software and Services.
In terms of forward non-GAAP P/E, MSI is trading at 33.82x, 33.4% higher than the industry average of 25.34x. Also, the stock’s forward EV/EBIT multiple of 26.33 is 19.8% higher than the industry average of 21.98.
During the third quarter that ended September 28, 2024, MSI reported sales of $2.79 billion, up 9% year-over-year. Also, non-GAAP net income attributable to MSI was $639 million. The company’s non-GAAP EPS increased 17% year-over-year to $3.74.
Street expects MSI’s revenue for the first quarter (ending March 2025) to grow 5.6% year-over-year to $2.52 billion, and its EPS is expected to grow 5% year-over-year to $2.95 for the same quarter. For the fiscal year (ending December 2025), the company’s revenue and EPS are expected to increase 6.1% and 7.7% from the prior year to $11.46 billion and $14.73, respectively.
Over the past nine months, MSI’s stock has surged 31.5% to close the last trading session at $462.73.
MSI’s POWR Ratings reflect its bright outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
MSI has a B grade for Momentum, Stability, Quality and Sentiment. It is ranked #16 out of 45 stocks in the Technology – Communication/Networking industry.
For additional MSI’s Growth and Value, click here.
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AMZN shares were trading at $222.13 per share on Thursday afternoon, up $0.02 (+0.01%). Year-to-date, AMZN has gained 1.25%, versus a 0.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor’s degree in finance and marketing and is pursuing the CFA program.
Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More…