of Nasdaq Composite It has once again reached an all-time high.
On March 1, the Nasdaq hit a previous high of 16,212, but it has retreated in 2021. Much of the credit for the new bull market should go to artificial intelligence (AI) stocks, including: Nvidiawhich was the driving force behind the index’s recent rise.
But which AI stocks will drive the Nasdaq higher from here? Will chipmakers like Nvidia lead the way, or will others lead the way? We asked a panel of three Motley Fool contributors for their thoughts.I suggest they keep an eye out cloud strike Holdings (CRWD -2.07%), Amazon (AMZN -0.83%)and microsoft (MSFT -0.71%).
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CrowdStrike’s strong leadership and strong financials have enabled the company to grow rapidly.
Jake Larch (CrowdStrike Holdings): The company I would choose as one that is likely to benefit greatly from this is crowdstrike holdingsThe reason I believe this is simple. Because cybercrime is in the news and CrowdStrike is one of the few companies that can help change that.
Additionally, the company, which operates a cybersecurity platform powered by machine learning and artificial intelligence, is pulling out all the stops financially.
In its most recently reported fiscal quarter (ended January 31), CrowdStrike blew away expectations.
- Sales reached $845 million, an increase of 33% from the previous year.
- Annual recurring revenue increased 34% year over year to $3.4 billion.
- GAAP subscription gross margin increased to 78% from 75% in the prior year period.
- Free cash flow increased to $283 million from $210 million in the same period last year.
Additionally, the company raised its outlook for the coming quarter and fiscal year. Co-founder and CEO George Kurtz has further reinforced the company’s key goal of achieving what he calls $10 billion in annual recurring revenue by 2030.
CRWD Free Cash Flow Data by YCharts.
Given CrowdStrike’s recent performance and the ever-increasing number of costly cyberattacks, Kurtz’s goal of roughly tripling annual recurring revenue by 2030 seems more achievable than ever.
That’s why it’s no wonder CrowdStrike’s stock price has risen 164% over the past 12 months.The company is also ranked among the top Nasdaq-100 Stock price in 2024: 29% year-to-date return is in line with the market’s darling stocks. meta platform and advanced micro device.
In summary, this AI-powered cybersecurity company posted another impressive quarter thanks to its innovative platform and outstanding leadership. The company’s stock price is contributing to the advance of the Nasdaq bull market, and growth-minded investors would be wise to consider buying the stock.
AI has improved productivity in nearly every department in this retail and cloud powerhouse
Will Healy (Amazon): Amazon is well known not only for e-commerce, but also for entertainment thanks to its Prime streaming service. However, this can mislead the average consumer about Amazon as a company.
Indeed, online sales are the company’s largest source of revenue, but the North American and International segments include other companies such as subscriptions, third-party sellers, and advertising.
Despite accounting for only 16% of Amazon’s net sales, the majority of Amazon’s operating profit comes from its cloud division, Amazon Web Services (AWS), which relies heavily on AI.
AWS applies generative AI technology to tasks such as improving client efficiency and automating business processes. Additionally, the company’s AI reaches retail customers directly through tasks such as supporting Alexa, improving product listings and ads, and allowing payments in the palm of a customer’s hand.
Excitement around AI has certainly helped push Amazon’s stock price higher. That’s probably the main reason the stock price has risen more than 80% in the last year.
Additionally, the company’s financial position appears to have recovered after the end of the pandemic lockdown, when online sales and cloud application usage slumped. Amazon reported net income of just over $30 billion in 2023, a dramatic turnaround from a $2.7 billion loss in 2022.
Furthermore, Amazon’s price-to-earnings ratio has fallen by about 60 times due to improved profits. The company’s stock also trades at 42 times forward earnings, a valuation that investors have been willing to pay given Amazon’s history of rapid growth.
As Amazon’s technology improvements improve its profitability, it should continue to drive investor returns thanks to its increasingly central role in the AI industry.
Microsoft’s diverse businesses and strong financials can anchor your portfolio
Justin Pope (Microsoft): It’s hard to overstate how important Microsoft is to the Nasdaq Composite Index. After all, this index gives him the second largest weight in the index, and today he has 11.5%. Next, consider stock price outperformance. The stock is up about 58% over the past year, compared to the index’s gain of 36%. Microsoft was the main driver of this record Nasdaq stock price rally.
If you’re a long-term investor, there’s a lot to look forward to. As a close partner with ChatGPT and Sora creator OpenAI, Microsoft is poised to play a key role in the AI space for years to come. Azure, Microsoft’s cloud platform, provides all of OpenAI’s computing power.
With businesses ranging from enterprise software to personal computers, gaming and cloud computing, the company is a diverse company that thrives without relying on a single market. It generates more than $67 billion in free cash flow annually, has increased its dividend for 22 consecutive years, and has a higher credit rating than the U.S. government.
Its size, with a market capitalization of $3 trillion, is unparalleled, but the growth is far from over. Analysts expect Microsoft’s annual profit growth rate to average close to 15% over the long term. There may not be another stock on Wall Street that offers such a combination of safety and growth potential, and Microsoft should definitely be an anchor in any portfolio.
