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Investing in stocks can be difficult because the past performance of the market is not necessarily indicative of what will happen in the future. However, knowledge is power, and being aware of past patterns helps ensure you are ready to strike if history decides to repeat itself. As a result, it only helps investors see what history suggests. Nasdaq Composite There is a possibility that the number will increase rapidly in 2024.
Since its inception in 1971, the index has risen an average of 19% each year, driven by market recoveries of the magnitude seen in 2023. Therefore, it’s not a bad idea to consider investing in the companies that support a large portion of the Nasdaq market. Composite growth.
The term “Magnificent Seven” was coined last year to describe seven of the most prominent technology companies. alphabet, Amazon (AMZN 0.40%), apple, meta platform, microsoft, Nvidia (NVDA 3.12%)and tesla. These companies dominate the technology industry, and many were key players in the market’s incredible recovery last year.
The Magnificent Seven could be a great investment to benefit from a potential rise in the Nasdaq Composite Index in 2024. Here are two Magnificent Seven stocks to buy right now.
1. Nvidia
Whether you’re a casual investor or someone who trades professionally, you’re probably aware of Nvidia’s meteoric rise over the last year. The company’s stock price soared 239% in 2023 as its graphics processing units (GPUs) became the gold standard for artificial intelligence (AI) developers around the world. These high-performance parallel processing chips are essential for training and powering his AI models, and the increased demand is causing his Nvidia’s revenue to skyrocket.
The company achieved an estimated 90% market share for AI chips, while competitors Advanced Micro Devices and intel Desperate to keep up with the cutting edge of technology.
In Nvidia’s most recent quarter (Q4 2024, ending in January), the company’s revenue increased 265% year over year to $22 billion. Meanwhile, operating profit rose 983% to nearly $14 billion. This impressive growth is primarily due to his 409% increase in data center revenue, which reflects a surge in AI GPU sales.
Competition in the AI chip space is expected to intensify this year, with AMD and Intel bringing powerful new hardware to the market. But on top of soaring profits, NVIDIA’s free cash flow rose 430% last year to his $27 billion, significantly outpacing AMD’s $1 billion and Intel’s minus $14 billion.
Therefore, despite the release of new GPUs from competitors, Nvidia’s head start in the AI space gives it more cash to continue investing in the technology and maintain its market dominance. Reserve funds could lead to further advances.
Data by YCharts
The table above shows that NVIDIA’s earnings could reach nearly $36 per share by fiscal year 2026. Multiplying this number by the forward price/earnings ratio (P/E) of 37 yields a stock price of approximately $1,300.
Given the company’s current position, its forecast calls for Nvidia stock to rise 44% over the next two fiscal years. Given its prominent position in the AI field, Nvidia is one of the Magnificent Seven stocks and cannot be overlooked.
2.Amazon
Amazon has come a long way since its beginnings as an online book retailer in Seattle nearly 30 years ago. The technology giant has expanded into multiple industries, from being an e-commerce giant to leading the cloud market, developing space satellites, and expanding into groceries, gaming, consumer technology, and more.
However, over the past year, attention has been focused on Amazon’s AI efforts. As the operator of Amazon Web Services (AWS), the world’s largest cloud service, the company has the potential to leverage its large cloud data centers and lead the generative AI market.
In 2023, AWS responded to the increased demand for AI services by introducing a variety of new tools. Amazon is also using AI to power its retail site. Ahead of its latest earnings release, the company announced an AI shopping assistant called Rufus.
In fiscal 2023, Amazon’s sales increased 12% from the previous year, and operating profit more than tripled to $37 billion. A strong rebound in e-commerce revenue last year saw Amazon’s free cash flow rise 904% to more than $32 billion, showing the company has the funds to continue investing in its business and overcome possible headwinds. ing.
Data by YCharts
The chart above shows that Amazon’s earnings could reach nearly $7 per share by fiscal year 2026. Multiplying this by the forward P/E ratio of 43 yields a stock price of $300.
According to this forecast, Amazon’s stock price will rise 68% from its current value over the next two fiscal years. As such, the company is worth considering before the stock price skyrockets.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Randi Zuckerberg is a former Facebook head of market development and spokesperson, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Dani Cook has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Intel and recommends the following options: Long January 2023 $57.50 call on Intel, Long January 2025 $45 call on Intel, Long January 2026 $395 call on Microsoft, Short January 2026 $405 call on Microsoft. call, and a May 2024 $47 short call. Intel. The Motley Fool has a disclosure policy.
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