Goldman Sachs strategists, led by David Kostin, recently noted that U.S. stocks are unlikely to maintain their above-average performance of the past decade. Investors are expected to shift towards other assets like bonds for better returns. The S&P 500 Index ($SPX) is projected to deliver a nominal total annualized return of just 3% over the next decade, a sharp decrease from the 13% return of the previous decade and the long-term average of 11%. The team wrote in a note dated Oct that investors should be prepared for equity returns in the next decade to be at the lower end of their typical performance distribution.
Businessman pointing arrow graph corporate future growth by Marchmeena29 via iStock.
Goldman Sachs has identified three stocks that are expected to beat the market in 2025: The Walt Disney Company (DIS), Micron Technology (MU), and Chewy (CHWY). These companies have been given a ‘Buy’ rating by Goldman analysts, who predict at least a 30% upside potential within the next 12 months.
1. The Walt Disney Company (DIS)
The Walt Disney Company, based in California, is a global entertainment leader with a market capitalization of $173.2 billion. Known for its iconic films, television networks, theme parks, and streaming services, DIS offers a wide array of media and consumer products.
2. Micron Technology (MU)
Micron Technology, a leading semiconductor company, is expected to deliver robust growth and outperform the market in 2025.
3. Chewy (CHWY)
Chewy, a prominent online pet retailer, is positioned to capitalize on the growing demand for pet products and services, setting it apart in the market for 2025 and beyond.
Each of these companies has a strategic outlook that aligns with Goldman Sachs’ expectations for market outperformance. The article delves deeper into their positions and potential for growth in the coming years.
Goldman Sachs has identified three stocks that are expected to beat the market in 2025. One of these is the entertainment giant, The Walt Disney Company, which has seen its shares rise by 5.7% year-to-date, albeit lagging behind the broader market.
On October 21, Disney announced a significant change in leadership. James P. Gorman, a veteran from Morgan Stanley (MS), has been appointed as the Chairman of the Board of Directors, effective from January 2, 2025. He will succeed Mark G. Parker, who has served for nine years and will step down on the same date. Parker expressed his satisfaction with Gorman’s appointment, stating, ‘James Gorman is an esteemed leader who has become an invaluable voice on the Disney Board since joining earlier this year, and I am extremely pleased that he has agreed to assume the role of Chairman upon my departure. Drawing on his vast experience, James is expertly guiding the extensive search process for a new CEO, which remains a top priority for the Board.’ In addition to the leadership change, Disney has also taken a strategic step to increase its revenue. On October 9, the company implemented a 6% increase in ticket prices for its two Southern California theme parks on its most popular days. This move is expected to have a positive impact on the company’s financial performance.Goldman Sachs has identified three stocks that are expected to outperform the market in 2025.
In addition to this financial insight, Disneyland Resort has increased prices for its Magic Key annual pass program. The Imagine Key, the least expensive option, now costs $599, which is a $100 increase from the previous price.
Disneyland’s financial performance was also noteworthy. The company reported its third-quarter earnings results in early August, showing a 3.7% year-over-year increase in total revenue to $23.16 billion, surpassing Wall Street’s expectations by $70 million. The revenue growth was particularly strong in different segments: 4% in entertainment, 5% in sports, and 2% in experiences. The company’s total segment operating income reached $4.25 billion, compared to the consensus of $3.84 billion and the $3.56 billion reported in the previous year.
A significant highlight of Disney’s report was the nearly tripled year-over-year operating income in the Entertainment segment, primarily driven by the profitability of Disney Plus. The total number of Disney+ subscribers was reported at 154 million.
Disney’s adjusted earnings per share (EPS) for the quarter was $1.39, exceeding the consensus estimate of $1.19 and last year’s $1.03. Total Hulu subscribers grew by 2% to 51.2 million, surpassing the consensus of 50.4 million. Meanwhile, Disney expects its streaming business to reach double-digit margins like Netflix (NFLX) and has introduced an ad-supported tier and restricted password sharing. However, management comments on the Experiences segment, including theme parks and cruise liners, led to a post-earnings sell-off of DIS stock. The company noted a slowdown in demand in this segment in Q3 and anticipates the ‘moderation’ in its domestic business to continue in the next few quarters.
Disney attributed the slowdown to the Olympics and China’s sluggish economy. Additionally, high-income customers have recently opted for international travel, while lower-income ones are under financial strain due to high inflation. It should be noted that DIS has faced several challenges in recent years across streaming, linear TV, and theme park segments, causing its stock to decline from an all-time high of around $200 in early March 2021. Bob Iger’s return as CEO brought a turnaround plan that started to materialize in early 2024. In recent events, Disney eliminated hundreds of executive positions in late September as part of its ongoing $7.5 billion cost-cutting initiative. The company has recently achieved strong results in content delivery, with Inside Out 2, Kingdom of the Planet of the Apes, and Deadpool and Wolverine collectively grossing $2.
Goldman Sachs has identified three stocks that are anticipated to outperform the market in 2025. Among them is Disney (DIS), which is expected to benefit significantly from its upcoming film releases. In 2025, Disney’s lineup includes highly anticipated sequels such as Avatar 3 and Captain America, with a new Star Wars film and Toy Story 5 scheduled for 2026. These releases are predicted to sustain the company’s revival over the next two years.
According to Wall Street projections, Disney (DIS) is forecasted to achieve a moderate 2.67% year-over-year revenue growth, reaching $91.27 billion in fiscal 2024. Additionally, the company’s earnings per share (EPS) are estimated to grow by 31.12% year-over-year to $4.93.
Disney (DIS) is also a dividend-paying stock, which adds to its investment appeal. On July 25, the company distributed a semi-annual dividend of $0.45 per share to its shareholders, marking a 50% increase from the previous dividend of $0.30 paid in January. With the current share prices, Disney offers a dividend yield of 0.95%.
From a valuation perspective, Disney (DIS) appears to be an attractive investment. With a price-to-earnings ratio of 19.24 times forward earnings, the stock is trading at a substantial discount compared to its five-year average of 42.
Goldman Sachs has identified three stocks that are expected to beat the market in 2025. Among them is Disney, which has recently experienced turmoil but has stabilized with the return of Iger, presenting an opportunity for investors to take advantage of the current discount before a new leader takes over.
On October 24th, Goldman Sachs analyst Mike Ng increased the price target for Disney from $120 to $125, which represents a roughly 32% increase above the closing price on Friday. The analyst also maintained a ‘Buy’ rating on the shares.
Goldman Sachs revised its estimates for Disney’s Fiscal Year 2025 Parks and Experiences to include the launch of the Lightning Lane Premiere Pass and the inaugural voyage of Disney Adventure, scheduled for December 15, 2025. This revision led to a 1 cent increase in the net FY25 EPS forecast to $5.15. Furthermore, the FY26 EPS projection was raised from $5.96 to $6.28.
Significantly, the majority of analysts view Disney’s stock as a ‘Strong Buy.’ Out of 29 analysts covering the stock, 19 recommend a ‘Strong Buy,’ three suggest a ‘Moderate Buy,’ and seven assign a ‘Hold’ rating.
2. Micron Technology
Micron Technology (MU) is one of Wall Street’s leading semiconductor companies, concentrating on memory and storage solutions like dynamic random-access memory (DRAM) and NAND flash memory. The company is in a favorable position to profit from the artificial intelligence (AI) megatrend. Its advanced technologies help in the development of faster and more intelligent global infrastructures necessary for AI model training, machine learning, and generative AI solutions. Currently, MU’s market cap is $119.6 billion. Micron stock has risen by 26.2% year-to-date. On October 23, Micron announced that its 9550 PCIe Gen5 E1.S data center SSDs were included on the Nvidia (NVDA) recommended vendor list for the NVIDIA GB200 NVL72 system and its derivatives. The GB200 NVL72 uses the GB200 Grace Blackwell Superchip to offer rack-scale, energy-efficient AI infrastructure.Goldman Sachs has identified three stocks that are expected to beat the market in 2025. One of these is Micron Technology, which has made significant strides in the field of AI workloads. The company’s Micron 9550 SSD, with its PCIe Gen5 storage integration, is recognized as an optimal solution for enhancing both performance and power efficiency in large-scale AI model training, real-time trillion-parameter language model inference, and high-performance computing tasks.
On October 15th, Micron introduced a groundbreaking new category of clock driver memory. This includes the Crucial DDR5 clocked unbuffered dual inline memory modules and clocked small outline dual memory modules. These JEDEC-standard solutions boast speeds of up to 6,400 MT/s, which is more than double the speed of DDR4 and 15% faster than traditional non-clock-driver-based DDR5.
Micron Technology’s stock experienced a surge, increasing by over 14% on September 26th. This growth was attributed to the company posting stronger-than-expected Q4 results and issuing above-consensus Q1 guidance.
Micron Technology (MU) reported a remarkable 93.3% year-over-year increase in revenue, reaching $7.75 billion. This growth was primarily driven by robust AI demand, which significantly boosted sales of the company’s data center DRAM products and its industry-leading high bandwidth memory. Additionally, Micron achieved a new record in NAND revenue, with data center SSD sales exceeding $1 billion in quarterly revenue for the first time. This performance surpassed the consensus estimate by $100 million.
Adjusted gross margin for Micron stood at 36.5%, which was higher than the expected 34.7% and showed a sequential improvement from 28.1% in Q3. Q4 adjusted EPS reached $1.18, surpassing analysts’ estimates by $0.07.
The rapid advancement in AI hardware, led by industry leader Nvidia and its groundbreaking innovations such as the upcoming GB200 from the Blackwell architecture, is revolutionizing the computing landscape. This technological progress is anticipated to increase demand for Micron’s products. Micron’s strong history of strategic partnerships with Nvidia positions the company well to capitalize on this trend.
Micron’s capital expenditures for AI investments were $3.1 billion in Q4 and totaled $8.12 billion for FY24. This led to adjusted free cash flows of $323 million in Q4 and $386 million for the full year. It’s crucial to note that MU benefits from its long-term partnership with Taiwan Semiconductor Manufacturing Company (TSM), ensuring compatibility between its products and the packaging for NVDA’s top offerings. Notably, the global adoption of AI is expected to expand further. Statista forecasts the worldwide AI market to grow at a compound annual growth rate (CAGR) of 29.4% through 2030, reaching approximately $827 billion. As a result, Micron should continue to benefit from this trend. “We are entering fiscal 2025 with the best competitive positioning in Micron’s history,” said Micron Technology President and CEO Sanjay Mehrotra.
Goldman Sachs has identified three stocks that are expected to outperform the market in 2025. One of these is Micron, a semiconductor company with promising financial forecasts. Micron anticipates record revenue for the first quarter of fiscal 2025, ranging from $8.5 billion to $8.9 billion, and an adjusted EPS between $1.66 and $1.82. The company also projects an adjusted gross margin between 38.5% and 40.5%.
For fiscal 2025, analysts predict a significant year-over-year increase in EPS for Micron, surging by 1,332.76% to $8.31, with revenue growth expected to be 51.98% year-over-year, reaching $38.16 billion.
Micron not only shows strong financial performance but also rewards its shareholders with dividends. On October 23, the company paid a quarterly dividend of $0.115 per share, maintaining the same rate as before. The current dividend yield for shares of MU is 0.43%.
Goldman Sachs has identified three stocks that are expected to outperform the market in 2025. One of these is Micron Technology (MU), which is currently trading at 12.13 times forward adjusted earnings. This is significantly lower than the sector median of 24.15x and its own five-year average of 84.63x, indicating that the stock may be undervalued. On September 26, Goldman Sachs analyst Toshiya Hari reaffirmed the firm’s ‘Buy’ rating on Micron, adjusting the price target to $145 from $158, which suggests a 34% upside potential from the stock’s recent close. The majority of analysts, with 23 out of 27, recommend a ‘Strong Buy’ for Micron stock, while two advise a ‘Moderate Buy,’ one suggests a ‘Hold,’ and one has a ‘Strong Sell’ rating.
Another standout stock is Chewy, Inc. (CHWY), valued at a market cap of $11.3 billion. Chewy operates as an online retailer, specializing in pet food and a variety of pet-related products. This company has been noted for its potential to beat the market in the coming year.
Goldman Sachs has identified three stocks that are expected to outperform the market in 2025. One of these is Chewy, a pet retailer that uses mobile applications and a retail website to distribute a wide range of items including pet food, treats, supplies, and healthcare products for various animals such as dogs, cats, fish, birds, horses, and reptiles. They also offer pet clothing and medications.
Chewy’s shares have seen a significant increase of 14.8% on a year-to-date basis. On August 28, the stock price surged by approximately 11% following the release of strong Q2 results. The company reported a 2.6% year-over-year increase in revenue to $2.86 billion, which was in line with expectations and attributed to continued user acquisition and enhanced customer engagement. This is demonstrated by their 20 million active customers, which increased sequentially during the quarter. Net Sales per Active Customer (NSPAC) also rose by over 6% year-over-year to $565. Chewy’s Autoship subscription program has been particularly successful, growing at twice the rate of the company’s overall revenue, expanding by 5%.
Chewy experienced enhanced customer engagement on its mobile app. There was a 13% year-over-year increase in unique customers placing orders and a 15% year-over-year growth in overall mobile app orders. This followed the company’s investment in redesigning its mobile app to improve user experience. It also contributes to the growth of NSPAC. Net sales reached 8% to $2.24 billion and contributed 78.4% to total revenue, up from 76.1% the previous year. CEO Sumit Singh said, ‘Our Q2 performance reflects another quarter of strong execution, delivering net sales at the high end of our guidance range.’ He added, ‘Chewy’s compelling value proposition is driving broader and deeper customer engagement, as reflected by our 20 million active customers, which grew sequentially in the quarter, and net sales per active customer of $565, which reached a new record for the company.’
Goldman Sachs has identified three stocks that are expected to outperform the market in 2025. One of these is Chewy Inc. (CHWY), which reported a profit increase from $0.15 per share in the same quarter of the previous year to $0.24 per share, surpassing the expected $0.21.
CHWY’s adjusted EBITDA saw a significant 64% year-over-year improvement, reaching $144.8 million, with an adjusted EBITDA margin of 5.1% compared to 3.2% in the same period last year. This growth was partly due to a 120 basis point increase in GAAP gross margin, which can be attributed to the favorable mix of its businesses and its strategic position as a channel for vendor partners. The company’s management is optimistic about the potential for further expansion of gross margins over time. Additionally, Chewy has been committed to returning value to its shareholders through share repurchases. In June, the company bought back approximately 17.6 million shares of Class A common stock from BC Partners for a total of $500 million, separate from its existing $500 million share repurchase program.During the quarter, Chewy repurchased approximately 1.3 million shares of Class A common stock, spending around $32.7 million under its share repurchase program. Looking ahead, Chewy anticipates Q3 sales to be in the range of $2.84 billion to $2.86 billion. For FY24, management maintains their revenue guidance, projecting around 5% year-over-year growth at the midpoint to $11.7 billion. At the same time, full-year adjusted EBITDA margin guidance is raised to a range of 4.5% to 4.7%, up from the previous forecast of 4.1% to 4.3%. This increase showcases the company’s continued execution towards a richer product mix and the growing leverage in its business model. Analysts tracking the company forecast an 88.97% year-over-year increase in its EPS to $1.30 for fiscal 2025. Moreover, Wall Street expects CHWY’s revenue to grow 5.
In terms of valuation, the stock is currently trading at 20.67 times the consensus earnings estimate for FY25, which is higher than the sector median of 16.97x. This indicates the stock is trading at a moderate premium compared to its peers. On Sept. 9, Goldman Sachs analyst Alexandra Steiger reiterated a “Buy” rating on shares of Chewy with a price target of $35.00, which is about 30% above Friday’s closing price. The firm’s analysis pointed out that the recent increase in Chewy’s active customer trends, as seen in the Q2 results, is primarily due to the company’s initiatives, including reactivation strategies and its application. On Oct. 9, TD Cowen initiated coverage of the stock with a “Buy” rating and a $38 price target. Chewy is the top pure-play e-commerce provider in the $14 billion U.42% year-over-year to $11.75 billion.
The analyst mentioned the U.S. pet industry in a research note to investors. Goldman Sachs noted that CHWY has a strong retail business and an expanding pet health offering, including the largest online pet pharmacy. The firm anticipates a 9% annual revenue growth through FY29, along with an expansion in EBITDA margin and strong free cash flow conversion. Analysts have a consensus rating of “Moderate Buy” on Chewy stock. Out of the 26 analysts covering the stock, 12 rate it as a “Strong Buy,” one has a “Moderate Buy,” 12 classify it as a “Hold,” and one assigns a “Moderate Sell.”
