The Nasdaq recently hit new highs, but the good times may not be over yet. History shows that during the past 10 annual market downturns dating back to the early 1970s, the index has since consistently risen for at least two consecutive years. And during his second-year rise, the index posted double-digit gains on all but one of his occasions. If this trend continues, the Nasdaq is on course for a 7.4% gain so far, and will rise even more in 2024.
And the stocks that have led the rally and are likely to continue to do so are artificial intelligence (AI) companies. Investors are excited about this high-growth, high-potential technology. AI has the potential to make game-changing moves, such as getting life-saving drugs to patients faster, and potentially saving businesses and individuals money and time when completing tasks and solving problems. There is a gender.
That’s why now is the perfect time to tap into potential AI juggernauts. He’ll check out two AI stocks and make a move to buy them before the Nasdaq soars.
Image source: Getty Images.
1. Amazon
Amazon (AMZN -2.42%) benefits from AI in two ways. The company uses AI across its e-commerce business to streamline operations and improve the customer experience. Amazon also sells AI solutions to customers through its cloud computing business, Amazon Web Services (AWS).
In e-commerce, Amazon’s AI helps select products based on purchase history, and AI helps the company choose the best delivery route for packages. These and other AI efforts should keep customers coming back and improve Amazon’s profitability.
As for AWS, the service offers everything from chips for customers to train their own AI models to fully managed services that allow customers to customize the most popular large-scale language models (LLMs) to suit their needs. provide something. In addition to our own low-cost chips, AWS customers have access to the fastest, highest-performing chips and services from the AI chip market leader. Nvidia (NVDA -0.12%).
All of this could make Amazon one of the potential winners of the AI revolution. And since Amazon already has a solid revenue track record, the company has the resources to invest in this popular area and continue to grow. In the most recent quarter, Amazon’s net sales increased by double digits and operating profit more than quadrupled to more than $13 billion.
The company’s stock currently trades at 42 times forward earnings estimates, a fair price for an already robust business with a strong future in AI.
2. Nvidia
Although Nvidia has 80% of the AI chip market and faces competitors in this space, it is unlikely to lose its lead any time soon for two reasons. First, the company’s first-to-market advantage and brand strength should keep at least some customers loyal. Second, Nvidia is pouring investment into research and development to stay ahead.
Investors are expecting Nvidia’s H200 chip to launch in the second quarter, followed by the Blackwell architecture along with the B100 chip potentially later this year. These new products are improvements to the company’s already fastest chips on the market.
But Nvidia doesn’t just design chips. The company also offers a complete portfolio of products and services for AI clients, including a software platform that acts as an “operating system” for AI. Nvidia products are available on AWS, as mentioned above, but also through all other major cloud providers. Therefore, it will be easy for customers to directly access his Nvidia products through cloud services.
Nvidia’s revenue is soaring, but given the company’s market leadership and potential to maintain its top spot, the growth may not be over yet. NVIDIA currently trades at 35 times forward earnings, which seems reasonable for such a solid growth stock. That’s why Nvidia is an easy addition to any AI portfolio.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Adria Cimino has a position at his Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.
