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Investors have flocked to shares of artificial intelligence (AI) companies, boosting the Nasdaq Composite Index (NASDAQ: ^IXIC) by 84% from January 2023 to December 2023. However, concerns over President Trump’s import tariffs led to a bear market earlier this year. Recently, optimism has returned with a U.S.-China trade deal at lower-than-expected tariff levels, allowing the Nasdaq to recover and trade near record highs.
Key AI players like Nvidia and Broadcom, along with companies such as Meta Platforms planning significant investments, have driven this market surge. Analysts predict that the AI market could reach over $2 trillion at a compound annual growth rate of 30% in less than a decade. Additionally, advancements in quantum computing are contributing to this growth, with major tech companies pursuing research in the field.
Historically, the Nasdaq has consistently reached new highs, suggesting that there is still room for growth driven by innovative technologies like AI and quantum computing. Investors have been advised to consider quality Nasdaq stocks available at lower valuations, with Nvidia trading at 33 times forward earnings, compared to an average of over 40 times in the previous year.
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