The Nasdaq Composite is expected to continue climbing in 2025 fueled by AI advancements.
From Nasdaq: 2025-01-01 04:05:00
The Nasdaq Composite has seen a significant rise over the past two years, driven by factors such as AI advancements, a U.S. Presidential election, declining inflation, and interest-rate cuts. With a 33% gain in 2024 following a 43% jump in 2023, historical data suggests the tech-focused index could continue climbing into 2025.
Investors are eyeing AI stocks for potential growth, with generative AI expected to have a $15.7 trillion economic impact by 2030. Leading AI companies like Nvidia, Palantir, Microsoft, Broadcom, and Arm Holdings are poised to benefit from this growth, with strong financial performance and innovative AI offerings driving their stock prices.
Nvidia has been a key player in the AI market, with its GPUs becoming the standard for various industries. The company is experiencing high demand for its products, with plans to release new processors soon. Despite facing tough comps, Nvidia is expected to see 50% growth next year, making it an attractive investment opportunity.
Palantir, with its AI platform, has seen significant growth in its commercial segment, with a 73% increase in deal value and a 77% rise in customer count. The company has closed numerous multimillion-dollar deals and remains reasonably priced with a low PEG ratio, indicating potential undervaluation.
Microsoft’s AI initiatives, including its AI assistants and Azure Cloud, have positioned the company for strong growth. With tools to track ROI in AI spending and a focus on developing AI agents, Microsoft is expected to generate significant revenue from its AI strategy. The stock is priced at a premium but offers growth potential.
Broadcom, a supplier of critical components for data centers, is set to benefit from the growing demand for AI processing. The company’s long-term guidance predicts a 500% growth in AI revenue by 2027, with recent additions of hyperscale customers further boosting its prospects. Broadcom’s stock is attractively priced with a low PEG ratio.
Arm Holdings, a key player in AI processing, licenses blueprints for CPU and GPU cores used in a wide range of chips. The company’s technology is fundamental to AI processing, with estimates suggesting significant sales volume through customers like Nvidia. Arm Holdings is reasonably priced with strong growth potential. Taiwan Semiconductor Manufacturing (NYSE: TSM) is a major player in AI adoption, with revenue from AI processors expected to triple this year, accounting for 15% of revenue. TSMC is building three semiconductor facilities to meet demand, with the first one starting production early next year. At 28x next year’s earnings, TSMC stock is attractively priced.
Alphabet (NASDAQ: GOOGL) has been an early adopter of AI, offering breakthroughs like Gemini 2.0 and Vertex AI to Google Cloud customers. The company’s Google Cloud is one of the fastest-growing cloud providers, with access to 160 foundational AI models. At 25x earnings, Alphabet is reasonably priced among major AI players.
Amazon (NASDAQ: AMZN) is gaining respect for its AI strategies, offering machine learning and generative AI features through AWS and Bedrock AI. Its Inferentia and Trainium chips provide cost-effective alternatives. With an improving economy and digital advertising business, Amazon is fairly inexpensive at 3x forward sales.
Meta Platforms (NASDAQ: META) utilizes AI for content curation and advertising, offering LLaMA AI to developers and individual users for free. LLaMA 3.1 helps create autonomous AI models for various tasks. With a strong digital advertising business and a stock priced at 28x earnings, Meta is a steal.
Tesla (NASDAQ: TSLA) stock is surging due to expected favorable policies from the incoming administration. Analysts predict a $2 trillion market cap by 2025, driven by advancements in full self-driving technology. Despite being expensive relative to peers, Tesla’s potential in the robotaxi market makes it a bargain at this price. 1. The United Nations reports that global carbon dioxide emissions have reached record levels in 2021, despite efforts to reduce greenhouse gas emissions. The increase is attributed to the rebound in economic activity following the COVID-19 pandemic, with China and India being the largest contributors to the rise in emissions.
2. A new study reveals that the Amazon rainforest is losing its ability to absorb carbon dioxide, a critical element in combating climate change. Deforestation, wildfires, and rising temperatures are all contributing factors to the decline in the rainforest’s carbon sequestration capacity.
3. In economic news, the U.S. economy added 531,000 jobs in October, surpassing economists’ expectations. The unemployment rate also dropped to 4.6%, the lowest since the start of the pandemic. The strong job growth is seen as a positive sign for the country’s recovery from the economic downturn caused by COVID-19.
4. The COP26 climate summit in Glasgow has concluded with world leaders agreeing to accelerate efforts to reduce greenhouse gas emissions and limit global warming to 1.5 degrees Celsius. However, critics argue that the commitments made by countries are not enough to meet the targets set out in the Paris Agreement.
5. In technology news, Apple has announced plans to invest $430 billion in the United States over the next five years, creating 20,000 new jobs. The tech giant also plans to build a new campus in North Carolina, focusing on research and development for its growing list of products and services.
Read more at Nasdaq: History Says the Nasdaq Will Soar in 2025. My Top 10 Artificial Intelligence (AI) Growth Stocks to Buy Before It Does.