S&P 500 nears all-time high on AI optimism, recommending tech stocks for potential gains

From Nasdaq: 2025-01-23 14:00:00

The Wall Street rally has returned with the start of Donald Trump’s new term as President, with major indexes bouncing back. The S&P 500 nearly hit an all-time closing high this week, driven by optimism around artificial intelligence (AI) and tech stocks.

Investing in tech stocks like Broadcom Inc. (AVGO), NVIDIA Corporation (NVDA), Amazon.com, Inc. (AMZN), and Arista Networks, Inc. (ANET) from the S&P 500 index could be beneficial. These stocks have positive earnings estimates and are ranked #1 (Strong Buy) or 2 (Buy) by Zacks.

The S&P 500 reached a new intraday record before closing just below its all-time high, signaling a resurgence in the market after a brief pause. The rally is fueled by optimism surrounding AI and Trump’s new term as President.

President Trump announced a $500 billion investment in AI infrastructure, named Stargate, in collaboration with Oracle Corporation, SoftBank, and OpenAI. This partnership has boosted tech stocks following the announcement.

AI’s potential remains untapped, inspiring tech companies like NVIDIA to explore its benefits for long-term growth. The global AI market is projected to grow to $243.7 billion in 2025, up from $184.1 billion in the previous year.

Broadcom Inc. (AVGO) is a leading semiconductor company focusing on AI chips. Its Ethernet AI solutions have seen significant growth, with an expected earnings growth rate of 29.4% this year and a Zacks Rank #2.

NVIDIA Corporation (NVDA) has been a standout success story in 2023, with a strong presence in GPUs for data centers and AI. The company is expected to see over 100% earnings growth this year and carries a Zacks Rank #2.

Amazon.com, Inc. (AMZN) dominates e-commerce and cloud computing markets, with an expected earnings growth rate of 82.4% this year and a Zacks Rank #2.

Arista Networks, Inc. (ANET) provides cloud networking solutions and is poised for growth with a 26.4% expected earnings growth rate this year and a Zacks Rank #2.

Experts recommend investing in these top tech stocks for potential early price pops. The Zacks Rank #1 Strong Buys have historically outperformed the market with an average gain of +24.1% per year since 1988.



Read more at Nasdaq: S&P on Track to Hit New Record High on AI Optimism: 4 Stocks to Buy