We recently published a list of 15 Tech Stocks with Best Earnings Growth in 2025. In this article, we are going to take a look at where Calix Inc. (NYSE:CALX) stands against other tech stocks with best earnings growth in 2025.
Earnings growth plays a vital role in global markets and equity investments, directly influencing stock prices and overall market performance. Companies with steady earnings growth are often considered more stable and reliable, attracting investor confidence and strengthening market sentiment. According to FactSet, the S&P 500 is expected to report a 9.5% earnings growth for 2024, surpassing the 10-year average annual growth rate.
Looking ahead, 2025 is projected to outperform 2024 in terms of earnings expansion. In a January 14, 2025 interview on Bloomberg’s ‘Open Interest’, Racquel Oden, HSBC’s U.S. Head of International Wealth and Private Banking, forecasted a 14.8% rise in corporate earnings for the year. She expressed optimism about broader market gains, particularly among the “forgotten 493” in the S&P 500—stocks beyond the high-performing “Magnificent 7.” Oden highlighted that technological advancements will enhance productivity, ultimately driving profitability and economic growth.
Similarly, in another Bloomberg interview in early January, Stephanie Guild, Head of Investment Strategy at Robinhood, discussed the challenges posed by elevated yields on valuations. She emphasized that equities are primarily influenced by three factors: market sentiment, valuation, and earnings growth. While high yields create hurdles, the key question remains whether corporate earnings can outpace the pressure from persistent interest rates. She also pointed out that the direction of earnings growth will largely depend on policies introduced by the new administration. In the short term, interest rates will steer market movements, but over the long run, earnings growth will be the main driver. Guild also highlighted mid-cap stocks as an attractive investment due to their favorable valuations.
Further reinforcing this outlook, FactSet’s February 14 report revealed that eight sectors have reported year-over-year revenue growth for Q4, with the IT sector leading the gains. Conversely, three sectors, led by Industrials and Materials, have shown a decline in revenue. This trend suggests a solid close to 2024 earnings. For 2025, FactSet analysts estimate a 12.7% year-over-year earnings growth.
Our Methodology
To determine the 15 technology stocks with the best earnings growth in 2025, we began by analyzing all U.S.-listed tech companies with a market capitalization of at least $2 billion. To exclude unprofitable companies, we considered only companies that reported a positive net profit margin over the trailing twelve months period. From this refined list, we further narrowed our selection to those expected to achieve greater than 25% EPS growth this year. Regarding next financial year (FY), for firms with more than six months remaining in their fiscal year, we used FY 2025 earnings estimates, while for those with six months or less left, we relied on FY 2026 estimates. Additionally, we considered only stocks with a projected upside of more than 10%. Finally, we ranked the companies in ascending order based on their expected earnings growth for next financial year (FY). We also included data on hedge fund holdings in these companies as of Q4 2024 to provide further insight into investor interest.
Note: All pricing data is as of market close on February 21.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Calix Inc. (NYSE:CALX)
Expected EPS Growth Next FY: 39%
Number of Hedge Fund Holders: 29
Calix Inc. (NYSE:CALX) specializes in providing cloud and software platforms that enable broadband service providers (BSPs) to deliver advanced broadband services. The company’s products allow telecommunications and utility providers to deploy, monitor, and manage fiber broadband networks. Its platform seamlessly integrates both hardware and software to support the rollout of ultra-high-speed internet, smart home solutions, and business services.
As broadband adoption continues to grow, Calix Inc. (NYSE:CALX) is leading the way in transforming the broadband experience for both consumers and businesses. The company’s Broadband Platform is designed to optimize network performance while enhancing the subscriber experience, resulting in reduced costs, increased subscriber retention, and improved financial performance. Calix Inc. (NYSE:CALX) is also well-positioned to benefit from the federal government’s Broadband Equity Access and Deployment Program (BEAD), which aims to bring high-speed internet to all Americans with $42.5 billion in funding.
Following the company’s Q4 2024 results announcement on January 29, there were consistent upward revisions of earnings estimates and price targets. Analysts from Roth MKM, JP Morgan, Rosenblatt, and Needham reiterated their ratings and raised their price targets. A Needham analyst expressed strong confidence in the company’s growth prospects, noting that Calix Inc. (NYSE:CALX)’s software model has reached “critical mass.” The analyst also believes that the company can maintain its “strong” market share in U.S. rural broadband and expects an improving fiber deployment market to continue through 2025, independent of delayed BEAD subsidies. The analyst reiterated a Buy rating and raised the price target to $53 from $45 earlier.
Overall, CALX ranks 10th on our list of tech stocks with best earnings growth in 2025. While we acknowledge the potential of CALX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CALX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.