The Nasdaq Composite index delivered an exceptional 43.4% return last year, marking a significant rebound from the previous year’s downturn. Despite skepticism about replicating such gains in 2024, historical trends suggest otherwise. This article explores the potential for Nasdaq’s continued outperformance and highlights two compelling artificial intelligence (AI) growth stocks poised for long-term success.
Last year witnessed an impressive performance for growth stocks, with the Nasdaq Composite index surging by a remarkable 43.4%. This resurgence came on the heels of a challenging 2022, where the index experienced a significant downturn. While some may doubt the possibility of replicating such gains in 2024, historical data presents a compelling case for Nasdaq’s continued resilience.
The current market recovery marks the Nasdaq Composite index’s 11th rebound since its inception in 1972. In each instance of market downturn, the subsequent recovery has lasted at least two years, accompanied by substantial gains. With the index bouncing back from negative years on 11 occasions, including the ongoing recovery, historical trends suggest a favorable outlook for Nasdaq in 2024.
One of the driving forces behind the market’s performance last year was the proliferation of artificial intelligence applications, spearheaded by advancements like ChatGPT. Companies across various industries are embracing AI tools to enhance productivity, setting the stage for sustained growth in this sector.
Amidst this backdrop, two AI-focused companies stand out as compelling investment opportunities:
- Nvidia (NASDAQ: NVDA): Nvidia’s shares have surged by over 200% in the past year, fueled by soaring demand for its AI chips. The company’s fiscal third-quarter results revealed a staggering 206% year-over-year revenue increase, driven by robust demand for its proprietary CUDA platform. Despite operating in a cyclical industry, Nvidia maintains consistent profitability, with a trailing-12-month operating margin above 20%. With a long-term market opportunity estimated at $1 trillion annually, Nvidia’s competitive advantage and growth potential make it an attractive investment prospect.
- UiPath (NYSE: PATH): UiPath offers an automation platform designed to streamline repetitive tasks across various industries. Its software enables companies to implement AI applications efficiently, driving productivity and efficiency gains. With a growing customer base, including large enterprises, UiPath reported a 24% year-over-year revenue increase in its fiscal third quarter, reaching an annualized $1.3 billion. As organizations increasingly embrace AI solutions, UiPath’s market leadership and strong customer retention position it for continued growth and market-beating returns.
Despite uncertainties surrounding market performance in 2024, historical trends and the proliferation of AI present opportunities for investors. The Nasdaq Composite index’s track record of resilience, coupled with the growth potential of AI-focused companies like Nvidia and UiPath, underscore promising investment prospects. By recognizing the long-term value of these innovative firms, investors can capitalize on the Nasdaq’s anticipated outperformance and navigate the evolving market landscape effectively.
