Nasdaq Shows Resilience Amid AI Investment Surge

The Nasdaq Composite is nearing breakeven this year, currently down less than 1%, recovering significantly from over a 20% decline in early April.

Investors can still capitalize on technology stocks thriving from increased spending on artificial intelligence (AI). Here are three companies positioned to benefit from advancements in generative and agentic AI across various sectors.

Leading the Artificial Intelligence Ecosystem

Nvidia (NASDAQ: NVDA) is developing an ecosystem for AI through its hardware, software, and architecture. CEO Jensen Huang has a strong track record, and Nvidia has growth prospects beyond AI alone.

AI is transforming industries, including generative AI, speech recognition, and medical imaging. Nvidia provides enterprises with necessary computing power and algorithms. Its offerings include advanced graphics processing units (GPUs), like Blackwell and the upcoming Rubin AI chips.

Nvidia’s NeMo enables the development of custom generative AI, while its CUDA platform allows developers to utilize Nvidia’s chips for demanding applications. Additionally, CUDA-Q provides access to large-scale quantum computing capabilities.

The company’s involvement in building AI factories enables businesses to deploy scalable AI platforms. Nvidia is also part of larger initiatives, such as the UAE Stargate tech alliance, which will feature a significant data center.

Exploring Nvidia’s Partners

Nvidia’s projects create a flywheel effect, boosting demand for its products. Other companies to consider include Nvidia’s upstream and downstream partners.

Taiwan Semiconductor (TSMC) (NYSE: TSM) manufactures many of Nvidia’s advanced chips. TSMC reported nearly 42% revenue growth in Q1, with a 60% increase in net income year-over-year. The company is on track to meet its 40% revenue growth target for this quarter.

Dell Technologies (NYSE: DELL), a key Nvidia partner, is positioning itself to benefit from data center expansion and AI compute needs with its “Dell AI Factory with Nvidia.” Dell’s server and networking revenue surged by 37% in its latest fiscal fourth quarter, with a backlog exceeding $9 billion.

Investment Considerations

Investors considering a $1,000 investment in Nvidia should note that it was not included in a recent list of the top ten stocks identified by an analyst team.

Historical data shows substantial growth from past recommendations, such as Netflix and Nvidia itself, which recorded significant returns over the years.

Each of these three companies plays a critical role in the booming AI sector. Their combined expertise may offer investors robust opportunities for growth through 2025 and beyond.

Howard Smith holds positions in Apple, Dell Technologies, and Nvidia. The Motley Fool recommends Apple, Nvidia, and Taiwan Semiconductor Manufacturing.

The views expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.