The Nasdaq Composite index is on a winning streak this year, driven by the surge in technology stocks. With a focus on growth and innovation, particularly in artificial intelligence (AI), chip designers, and cloud computing players, the index has reached record highs. The current bullish trend has historical support, with the Nasdaq showing an average climb of 64% in the first two years of positive performance following periods of market gains. Based on this historical pattern, the Nasdaq could soar even higher in the near future.
Amazon: Riding the AI Wave
Amazon (NASDAQ: AMZN) has seen its shares rise by 20% this year, showing promise for further growth. As an ideal AI stock, Amazon leverages the technology to enhance its e-commerce operations and offers AI products and services through its Amazon Web Services (AWS). By using AI to optimize fulfillment center operations and delivery routes, Amazon stands to improve efficiency and reduce costs effectively.
The company’s AWS unit focuses on catering to diverse AI needs, providing services from basic chip offerings to customizable large language models (LLMs). With a vast audience already engaged with AWS, Amazon is poised to capitalize on AI advancements, potentially boosting its earnings through enhanced e-commerce processes and higher AWS revenues.
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Currently trading at 43 times forward earnings estimates, Amazon presents itself as a reasonably priced growth stock with a strong profitability outlook and a robust AI strategy.
Intel: Powering Up in the AI Race
Intel (NASDAQ: INTC) has faced challenges in the AI domain but is making significant strides to catch up. The introduction of a range of AI products, including the Intel Core Ultra mobile processor family and AI-accelerated Xeon processors, signals a new phase of growth for the chip giant. While not directly threatening Nvidia’s dominance, Intel’s innovations align well with the expanding AI market, projected to exceed $1 trillion by the end of the decade.
Moreover, Intel’s strategic move to open up its manufacturing network to third parties with the aim of becoming a major foundry player by 2030 could unlock substantial growth opportunities. With commitments from key customers and advanced packaging deals in place, Intel is positioning itself for future success.
Trading at 29 times forward earnings estimates, Intel’s stock appears undervalued considering its AI and foundry prospects, along with analyst projections of robust annual growth in the coming years. This makes it an opportune moment to consider investing in this tech giant.
Is Amazon Worth the Investment?
While Amazon shows promise as an AI-driven growth stock, investors should carefully evaluate their investment decisions. The Motley Fool Stock Advisor highlights ten other stocks with strong growth potential that may outperform Amazon in the long run. With a proven track record of outperforming the S&P 500 since 2002, the service provides valuable insights and recommendations for building a successful investment portfolio.
Disclosure: John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino holds positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. It also recommends Intel and options related to Intel’s stock. The Motley Fool maintains a disclosure policy.
The views and opinions expressed in this article are solely those of the author and do not represent the views of Nasdaq, Inc.
