Nasdaq index has a history of rebounding after declines, driven by AI tech stocks
From Nasdaq:
The Nasdaq index has seen negative annual returns 14 times in its history, including drops of at least 30% in 2002, 2008, and 2022. However, following these declines, the index rallied in the subsequent years. In 2023, the Nasdaq rebounded by 43%, driven by the influence of artificial intelligence (AI) in tech stocks.
Amazon, known for its e-commerce and cloud computing services, has faced challenges due to high inflation and rising interest rates. However, recent investments in AI, such as Anthropic, could reignite growth. With a price-to-sales ratio of 3.1, Amazon’s stock is seen as a bargain opportunity to capitalize on its AI potential.
Microsoft’s investment in AI, particularly through ChatGPT, has positioned the company well for the future. While trading at a premium valuation, Microsoft is expected to dominate in the AI landscape. Dollar-cost averaging could be a strategy to consider for investors looking to add Microsoft shares to their portfolio.
Alphabet, the owner of Google and YouTube, is experiencing a slowdown in its advertising business amid competition from social media platforms. Despite this, the company’s cloud computing segment shows promise. With AI efforts focused on its cloud business, Alphabet’s stock could be undervalued, presenting an opportunity for investors.
Meta Platforms, which owns Instagram and Facebook, struggled with decelerating growth in advertising before refocusing on core businesses. Following positive earnings reports and new shareholder rewards, Meta appears to be on the path to recovery. With AI impacting both advertising and metaverse ventures, Meta has long-term growth potential.
Nvidia, a leader in GPU development, is heavily involved in the AI narrative. With high-demand products in generative AI, Nvidia’s profit deployment into voice recognition software and robotics sets it apart. The company’s robust outlook and justified valuation make it an attractive long-term investment option for investors interested in AI technology.
Read more at Nasdaq: History Says the Nasdaq Will Soar in 2024: Here Are My Top 5 “Magnificent Seven” Stocks to Buy Before It Does