The Nasdaq Composite has been steadily rising for over two years. Key factors behind this growth include advancements in artificial intelligence (AI), a U.S. Presidential election, declining inflation, and anticipated interest-rate cuts. In 2023, the tech-focused index jumped 43%, followed by a 33% increase in 2024 (as of this writing).
Historical trends indicate this rally might continue. Since 1972, after annual gains of 30% or more, the Nasdaq has averaged a 19% increase the following year. If history repeats, 2025 could see further growth.
The Role of AI in Market Optimism
AI advancements are significantly boosting investor confidence. According to PricewaterhouseCoopers, generative AI could contribute $15.7 trillion to the global economy by 2030. This potential profit surge positions leading AI companies as attractive investments. Below are ten promising AI stocks to consider before the Nasdaq climbs higher.
1. Nvidia
Nvidia (NASDAQ: NVDA) dominates the AI processing market. Its GPUs, already industry leaders for gaming, cloud computing, and machine learning, became indispensable with generative AI’s rise. Nvidia’s next-generation Blackwell processors are set to launch, and CEO Jensen Huang describes demand as “insane.”
Despite facing tough comparisons after five quarters of triple-digit growth, Wall Street expects Nvidia’s revenue to grow 50% in 2025. With a forward price-to-earnings (P/E) ratio of 31, Nvidia remains attractively priced given its market potential.
2. Palantir
Palantir Technologies (NASDAQ: PLTR) leveraged its 20 years of AI experience to capitalize on generative AI trends. Its Artificial Intelligence Platform (AIP) quickly gained traction, supported by boot camps pairing customers with Palantir engineers. These efforts have driven a 54% year-over-year increase in its U.S. commercial segment and boosted deal values by 73%.
In 2024, Palantir closed 104 deals worth $1 million or more. Its stock remains undervalued with a price/earnings-to-growth (PEG) ratio of 0.65.
3. Microsoft
Microsoft (NASDAQ: MSFT) played a pivotal role in advancing generative AI. Its partnership with OpenAI and integration of AI tools like Copilot are transformative. Copilot could generate $100 billion in revenue by 2027, while Microsoft’s Azure Cloud has achieved 30% growth in fiscal 2024.
By addressing AI adoption barriers, such as cost and ROI tracking, Microsoft ensures long-term relevance. Its forward P/E ratio of 33 is justified given its growth outlook.
4. Broadcom
Broadcom (NASDAQ: AVGO) provides crucial components for data centers, where most AI processing occurs. The company forecasts a 500% increase in AI revenue by 2027. Two new hyperscale customers could further boost its growth.
With a PEG ratio of 0.09, Broadcom offers significant value for investors.
5. Arm Holdings
Arm Holdings (NASDAQ: ARM) licenses essential CPU and GPU cores for AI applications. Nvidia’s GH200 Grace Hopper Superchip, for instance, relies on Arm’s V9 cores. Estimates suggest Nvidia will sell 4 million GPUs this year, showcasing Arm’s wide-reaching impact.
Arm’s PEG ratio of 0.87 highlights its strong potential.
6. Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (NYSE: TSM), or TSMC, is the leading semiconductor foundry. It supports major AI players like Nvidia and Broadcom. Management projects AI-related revenue to triple in 2024, comprising 15% of total revenue.
TSMC’s expansion plans include three new facilities, enhancing economies of scale. At 28x forward earnings, the stock is a compelling choice.
Tech Giants and AI Pioneers
7. Alphabet
Alphabet (NASDAQ: GOOGL) embraced AI early, using it to enhance search results and digital advertising. Its recent AI innovations include Gemini 2.0, a large language model enabling advanced AI agents. Google Cloud’s Vertex AI platform further strengthens Alphabet’s market position.
Priced at 25x earnings, Alphabet is one of the most affordable major AI stocks.
8. Amazon
Amazon (NASDAQ: AMZN) is emerging as an AI leader. Its cloud division, AWS, outpaces competitors in AI feature releases. AWS’s Bedrock AI provides access to top generative AI models, while purpose-built chips like Inferentia and Trainium offer cost-efficient alternatives to GPUs.
Amazon’s stock trades at about 3x forward sales, presenting a strong value.
9. Meta
Meta Platforms (NASDAQ: META) leverages AI to optimize social media content and targeted ads. Its advanced LLaMA AI models are attracting attention, with LLaMA 3.1 aiding in creating autonomous AI agents.
At 28x earnings, Meta’s stock is reasonably priced given its growth prospects.
10. Tesla
Tesla (NASDAQ: TSLA) is advancing its AI-driven robotaxi agenda. Analyst forecasts suggest the robotaxi market could be worth $28 trillion in the next decade. While Tesla’s stock trades at 173x forward earnings, its potential leadership in this market might justify the valuation.
Don’t Miss This Opportunity
Rarely do investors get a second chance to invest in transformative technologies. With AI poised to reshape industries, these stocks offer significant growth potential. Act now to capitalize on this opportunity before the Nasdaq’s next surge.