The Nasdaq has soared over the past two years, gaining more than 43% last year and is expected to rise more than 33% in 2024. This is thanks to the boom in artificial intelligence (AI), which is the top five benchmark of all. This high-growth sector is home to the focal stocks and several other top-10 stocks. The current $200 billion AI market is predicted to reach more than $1 trillion by the end of 2020, and early adopters of this technology could reap significant benefits in the coming years.
Why is everyone excited about AI? Because it has the potential to revolutionize the way many things are done and save businesses time and money, which is great news for increasing revenue. This alone may give us some optimism about the path the Nasdaq will take next year.
But history also gives us reason to believe in more wins for the Nasdaq. Since 1990, the index has increased for two or more consecutive years in five of the six periods of increase. Therefore, the Nasdaq has generally been up more than three years recently.
Of course, there is no guarantee that this will happen. Indices and stock prices can surprise you. But if that happens, you need to be prepared. And the best way to prepare is to buy certain stocks before the Nasdaq spikes again. Let’s find out which one it is.
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The stock is a member of the Nasdaq, S&P 500, and recently joined the Dow Jones Industrial Average. Over the past five years, we have advanced more than 2,400%. But don’t worry. The company may still have plenty of room to run thanks to its dominance in the AI market and significant events currently underway. That’s why it remains a great buy today, and could drive the Nasdaq higher again next year.
I’m talking about Nvidia (NASDAQ:NVDA)seller of the world’s most powerful graphics processing units (GPUs). These chips are a key element in many important AI tasks, such as model training and inference. Customers recognize Nvidia’s strength here, which is why they wait for these top products to be delivered and pay more than competing AI chips. In fact, Oracle co-founder Larry Ellison even said recently that he and Tesla leader Elon Musk actually begged Nvidia head Jensen Huang for more GPUs. I did.
Therefore, the world’s largest companies, those with the resources to invest heavily in AI, see value in choosing Nvidia over competitors. This, and Nvidia’s promise to update its GPUs annually, should help the company maintain its top spot in this fast-moving industry.
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One thing in particular could lead to stronger earnings power in the coming quarters, leading to even higher stock prices. This quarter, Nvidia is ramping up production of its new Blackwell architecture. This is an innovative product with many customizable features, including different chips and network options. Blackwell is Nvidia’s most powerful AI platform to date, and demand has been “tremendous,” the company said in its latest earnings call.
Nvidia even expects Blackwell to generate billions of dollars in revenue during the first quarter of this commercialization. So as this announcement unfolds and Blackwell begins contributing significantly to Nvidia’s already soaring revenues (up 94% to $35 billion in the most recent quarter), investors may continue to flock to the market leader. I don’t know.
But what about ratings? At 47 times expected earnings, Nvidia’s stock price is not cheap. However, given Nvidia’s leadership in the market, its commitment to innovation, and another important factor, Nvidia’s sales profitability, I don’t think this level is very expensive either. The company has maintained gross margins of over 70% over the past few quarters.
All of this could boost Nvidia in the coming quarters and fuel further gains for the Nasdaq in 2025. The good news is that even if Nvidia stock takes a pause next year, its long-term earnings outlook remains positive. That means investors can still get a high valuation. Big wins over time.
Have you ever felt like you missed out on buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our team of expert analysts will issue a “Double Down” stock recommendation on a company we think is about to crash. If you’re already worried that you’re missing out on an investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves.
NVIDIA:If you invested $1,000 when it doubled in 2009;That’s $348,112!*
Apple: If you invested $1,000 when it doubled in 2008, you would have earned $46,992!*
Netflix: If you invested $1,000 when it doubled in 2004, you would have earned $495,539. *
We currently have “double down” alerts on three great companies, and we may not see an opportunity like this again anytime soon.
See 3 “Double Down” stocks »
*Stock Advisor returns as of December 9, 2024
Adria Cimino has held positions at Oracle and Tesla. The Motley Fool has positions in and recommends Nvidia, Oracle, and Tesla. The Motley Fool has a disclosure policy.
History says the Nasdaq will skyrocket in 2025. Before that, here’s one AI stock you should buy. Originally published by The Motley Fool
Adnan is a passionate doctor from Pakistan with a keen interest in exploring the world of politics, sports, and international affairs. As an avid reader and lifelong learner, he is deeply committed to sharing insights, perspectives, and thought-provoking ideas. His journey combines a love for knowledge with an analytical approach to current events, aiming to inspire meaningful conversations and broaden understanding across a wide range of topics.
