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2023 was a year of recovery for the tech industry Nasdaq Compositehas soared 43% in 2022 as inflation and other macroeconomic challenges that negatively impact stock prices ease. But if we look back at history, the rise may have just begun. An analysis of data going back to 1971 shows that the index has risen an average of 19% each year after a bear market rally like the one experienced in 2023.
Nvidia (NVDA 2.29%) and Amazon (AMZN 0.46%) There could be a great way to bet that this pattern will repeat in 2024 and beyond. Especially as both companies develop new growth strategies. Artificial intelligence (AI) technology.
Image source: Getty Images.
1. Nvidia
With its stock up 236% over the past 12 months, Nvidia was one of the Nasdaq’s biggest winners in 2023, helping fuel the index’s recovery after a slump in 2022. Tech giants are riding a wave of demand for large-scale data center chips. Language models — the technology behind AI chatbots. And with these applications becoming more and more demanding, Nvidia’s boom may just be beginning.
Although 2023 was a landmark year for AI, the technology is still in its infancy.as an article on time I got it., The rate at which AI outperforms humans at a variety of tasks is accelerating, and this could unlock new and increasingly complex use cases. Nvidia is at the forefront of this trend thanks to industry-leading chips such as the H100, whose sales drove its third-quarter revenue to $18.12 billion, up 206% year over year. .
To be fair, Nvidia isn’t the only game in town.rival aadvanced micro device are vying to seize the opportunity with their own new AI chips. But industry experts predict that the market for that hardware will grow tenfold to $400 billion by 2027, so more players will be able to do so without significantly hurting Nvidia’s revenue growth and profits. There seems to be plenty of room for participation.
Company’s Expected price/earnings ratio (P/E) multiple A stock price of 24 also means the stock is reasonably valued compared to the Nasdaq average of 29.
2.Amazon
With a market capitalization of $1.55 trillion, Amazon is one of the world’s largest companies. And this did not happen by chance. The technology giant’s success will depend on its ability to quickly expand into new industries, from e-commerce to cloud computing. Now, AI technology could help power that next stage of expansion.
Amazon is incorporating AI into most aspects of its operations. This includes virtual assistant Alexa, powered by product recommendations, fulfillment optimization, and new conversational features. But the biggest impact will probably be felt on Amazon Web Services (AWS). AWS is building a platform for enterprise customers to create and scale their own AI applications.
Emblematic of these efforts, Amazon in September announced plans to invest up to $4 billion in Anthropic, an AI research startup similar to ChatGPT developer OpenAI. As part of the deal, Athropic will use his AWS cloud services to train and deploy models as proofs of concept for Amazon’s new Trainium and Inferentia AI data center chips, designed as high-performance, low-cost replacements. It might work. to third-party hardware.
Trading at a forward P/E ratio of 38 times, Amazon stock is more expensive than the Nasdaq average. However, given that it is a well-diversified product, the premium seems reasonable. Excellent company We have a long track record of success.
Will it be another banger year?
nothing is guaranteed stock marketBut there are many reasons for investors to be optimistic about 2024. First, the high inflation that caused so many problems over the past two years is largely under control, and the Federal Reserve is likely to lower benchmark interest rates this year, giving businesses access to the capital they need to sustain and grow their businesses. It becomes easier.
This could be a blow to AI startups, many of which rely on enterprise AI solutions from Nvidia and Amazon. Both tech giants look poised to succeed beyond 2024, and it’s not too late for investors to bet on long-term success.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Will Ebifang has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, and Nvidia. The Motley Fool has a disclosure policy.
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