Predictive Analysis Indicates a Surge in Nasdaq by 2025. This is the AI Stock You Should Invest In Prior to Its Rise.
The Nasdaq has surged significantly over the past two years, clocking in over 43% growth last year and aiming for a 33% increase in 2024. This boom is largely attributable to the rise of artificial intelligence (AI), with five of the index's most heavily-weighted stocks and several others in the top 10 operating in this high-growth sector. The current $200 billion AI market is projected to expand to over $1 trillion by the end of the decade, making early adopters potentially substantial beneficiaries.
People are thrilled about AI due to its potential to revolutionize numerous aspects, ultimately saving companies time and money. This positive impact on earnings growth gives us reasons to be hopeful about the Nasdaq's future trajectory.
Moreover, historical patterns suggest that the Nasdaq's optimistic run might continue. Since 1990, five out of six periods of growth have seen the index increasing for more than two years consecutively. Consequently, the Nasdaq has typically recorded three or more years of growth recently.
However, it's essential to remember that nothing is guaranteed in the world of investments. Indexes and stocks can surprise us at any moment. Nevertheless, if the trend continues, it's wise to get ready. And the best way to do so is to choose the right stock before the Nasdaq mounts yet another ascent.
Let's talk about one such stock.
A versatile player in the major leagues
This stock is a member of the Nasdaq, the S&P 500, and most recently, the Dow Jones Industrial Average. It has skyrocketed by over 2,400% over the past five years. Despite its impressive run, there's still room for further growth due to its dominance in the AI market and an important development currently underway.
I'm referring to Nvidia (NVDA 4.45%), the prominent seller of the world's best graphics processing units (GPUs). These chips are integral to numerous AI tasks, specifically training and inferencing models. Customers recognize Nvidia's strength in this area, leading to increased demand for its high-end products, even when they're priced higher than rival AI chips. In fact, industry giants like Oracle's co-founder Larry Ellison and Tesla's Elon Musk have reportedly pleaded with Nvidia's CEO, Jensen Huang, for more GPUs.
The world's largest companies, with the financial means to invest heavily in AI, prefer Nvidia over competitors. Additionally, Nvidia's commitment to updating its GPUs annually keeps it at the forefront of this fast-evolving industry.
A factor that could drive this top stock even higher
One key factor could generate strong earnings in the upcoming quarters and further stock gains. In the current quarter, Nvidia is ramping up production of its new Blackwell architecture, a trailblazing innovation offering numerous customizable features, such as diverse chips and networking options. Blackwell is Nvidia's most powerful AI platform to date, with demand reportedly "staggering," according to the company's recent earnings call.
Nvidia anticipates billions of dollars in Blackwell revenue during this inaugural commercialization quarter. As the launch progresses and Blackwell starts significantly contributing to Nvidia's already skyrocketing revenue (it grew 94% to $35 billion in the most recent quarter), investors may continue to gravitate towards this market leader.
However, some may question whether Nvidia's stock is reasonably priced at 47 times forward earnings estimates. Despite this, I don't believe the current level is exorbitantly expensive, given Nvidia's market dominance, commitment to innovation, and consistent high profit margins (maintaining over 70% in recent quarters).
All these elements could boost Nvidia in the coming quarters, leading to further NASDAQ gains in 2025. Luckily, even if Nvidia stocks pause in 2024, the long-term earnings outlook remains promising, providing another opportunity for investors to reap substantial returns.
Investors looking to capitalize on the Nasdaq's continued growth should consider allocating funds towards stocks that are heavily involved in artificial intelligence (AI). Given the massive projected expansion of the AI market, companies that excel in this sector, such as Nvidia, could yield substantial returns.
Furthermore, as Nvidia prepares to launch its new Blackwell architecture, which promises significant customizable features, the company's revenue is expected to skyrocket, potentially driving further growth in its stock price.
