Goldman Sachs Releases 2025 Outlook for TMT (Technology, Media, Telecom) Sector

Goldman Sachs' Global Investment Research team in the US has published its 2025 outlook for the TMT (Technology, Media, Telecom) sector. Asian tech investors remain cautious towards this sector due to a mix of supply chain issues, earnings/valuation pressures for some companies, market share competition in the chip supply chain, and sustainability debates in the memory and equipment sectors. However, Goldman Sachs analysts believe that the earnings report of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR(TSM.US), set to be released this Thursday, could be a positive catalyst.

According to data from Goldman Sachs Prime Book, fund managers' net buying of US TMT stocks has been the fastest in three months, primarily driven by long positions. The current long/short ratio for US TMT stocks stands at 1.98.

In the semiconductor sector, companies related to AI infrastructure construction like NVIDIA Corporation(NVDA.US), Marvell Technology Group Ltd.(MRVL.US), and CREDO TECHNOLOGY GROUP HOLDING LTD(CRDO.US) shared constructive/optimistic outlooks at the CES conference. However, companies like ON Semiconductor Corporation(ON.US)  held a neutral or cautious stance due to demand uncertainty and inventory issues.

Goldman Sachs analysts upgraded Nuveen Select Tax-Free Income Portfolio(NXP.US) to a "Buy" rating and increased its target price to $257, citing that automotive MCU (Microcontroller Unit) is in the mid-to-late stages of a down cycle, with the company poised to gain market share and achieve cross-cycle expansion.

Goldman Sachs analysts downgraded Advanced Micro Devices, Inc.(AMD.US) to a "Neutral" rating to reflect a more conservative outlook on the PC and traditional server business and increasing competition in the data center GPU space.

In the payments sector, based on fourth-quarter earnings reports, Goldman Sachs analysts favor Bill.com Holdings(BILL.US), Affirm Holdings, Inc. Class A(AFRM.US), Global-E Online Ltd.(GLBE.US), and Riskified Ltd.(RSKD.US), while maintaining a cautious stance on Marqeta, Inc.(MQ.US) and Global Payments Inc.(GPN.US).

Goldman Sachs advises investors to hold leading AI stocks and cyclical stocks in 2025, listing the following as "Buy" rated: NVIDIA Corporation(NVDA.US), Broadcom Limited(AVGO.US), Lam Research Corporation(LRCX.US), Micron Technology, Inc.(MU.US), Teradyne, Inc.(TER.US), Entegris, Inc.(ENTG.US), and NXP Semiconductors NV(NXPI.US).

In the software sector, company management indicated a stable market environment, aligning with Goldman Sachs' 2025 software outlook report, which projects steady revenue growth after years of slowing industry growth.

Humanoid robots remain one of the few themes that continue to attract investors. Elon Musk previously stated that if everything goes well,  Tesla Motors, Inc.(TSLA.US) 's humanoid robot production could increase tenfold to 50,000 to 100,000 units by 2026, with further tenfold growth projected for 2027. Consequently, Goldman Sachs analysts believe this enhances long-term visibility, with their top pick being Chinese Sanhua Intelligent Controls.