Citi: These 2 AI stocks will be the movers and shakers of 2025

Artificial Intelligence (AI) is driving the technology market and significantly changing the industry. The impact of AI ranges from cloud computing to network services to graphic design. Analysts predict that this trend will continue in the coming years, with companies that provide infrastructure for AI playing a key role.

Citi analyst Atif Malik points out that the networking equipment segment in particular will be a key driver of growth in 2025. Among the main candidates, he identifies companies Coherent Corporation a Cienawhose stocks he sees as the best picks for the period ahead.

Coherent Corporation $COHR

Coherent Corporation, based in Pennsylvania, has a strong position in semiconductors, optoelectronics and highly specialized optical systems. Its products, such as lasers and optical circuits, play a key role in modern automation and AI technologies.

One of Coherent's most significant contributions is its optical switch technology, which is essential for AI-enabled data centers. The growth in demand for data centers, driven by the AI boom, has led to a 145% growth in the company's stock in 2024.

In fiscal 1Q25, the company reported revenue of $1.35 billion, up 28.6% year-over-year. Earnings per share came in at 74 cents, well above expectations. According to Malik, Coherent is ideally positioned for growth thanks to its broad AI optics platform (including lasers, transceivers and other technologies), with AI-related sales expected to grow 180% to $1.7 billion in 2025.

Malik points out that the market is still underestimating the company's potential, and predicts its stock will reach a price of $136, which would represent 27.5% growth within a year.

Price $CIEN

Ciena is another Citi favorite in the AI infrastructure space. This company focuses on optical and routing systems, automation software and services that support network scaling and traffic optimization using AI.

Ciena is capitalizing on the growing importance of DCI (data center optical interconnects), which allows it to offer customers more efficient and scalable solutions. Although the optical transmission market experienced a downturn in 2024 due to macroeconomic issues, it is expected to recover in 2025. Ciena also has an advantage in pluggable ZR/ZR+ modules, which increase data center transmission capacity.

In fiscal 4Q24, the company reported revenue of $1.12 billion, beating expectations by $20 million. Although earnings per share came in at 54 cents, below estimates, investors were not deterred and the stock continued to rise. Malik predicts that due to AI-related opportunities, Ciena will benefit from a significant market recovery. He estimates a target price of $98 for the stock, a 9% increase.

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Source: Yahoo Finance.