2023 has been a year of recovery for the tech-heavy sector Nasdaq Composite, which jumped 43% amid easing inflation and other macroeconomic challenges that hurt stocks in 2022. But if history is anything to go by, the rally may have just begun. According to an analysis of data going back to 1971, the index rose an average of 19% each year after a bear market recovery like the one we saw in 2023.
Nvidia (NVDA 2.29%) And Amazon (Amzn 0.46%) There could be great ways to bet on this pattern repeating in 2024 and beyond – especially as both companies develop their own new growth strategies around Artificial Intelligence (AI) technology.
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1. Nvidia
With shares up 236% over the past 12 months, Nvidia was one of the biggest winners on the Nasdaq in 2023 — helping to drive the index’s recovery after a slump in 2022. The tech giant is riding a wave of demand for its data center chips For large companies. Language Models – The technology behind AI chatbots. With demand for these applications on the rise, Nvidia’s boom may just be beginning.
While 2023 has been a breakout year for AI, the technology is still in its nascent stage. As an article in time male, The rate at which AI outperforms humans at various tasks is accelerating, which could open the door to new and increasingly complex use cases. Nvidia is at the forefront of this trend due to its industry-leading chips like the H100, whose sales helped boost its revenue 206% year over year to $18.12 billion in the third quarter.
To be fair, Nvidia isn’t the only game in town. competition aAdvanced micro devices It’s racing to get a slice of opportunity with its new AI chips. But with industry experts predicting the market for these devices will grow tenfold to reach $400 billion by 2027, there appears to be plenty of room for more players to participate without significantly eroding Nvidia’s revenue growth and margins.
Company Price-to-earnings (P/E) multiple. 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 largest companies in the world. This did not happen by chance. The tech giant’s success depends on its ability to quickly grow its footprint in new industries — from e-commerce to cloud computing. Now, AI technologies can help fuel the next phase of expansion.
Amazon is integrating AI into most aspects of its operations. This includes product recommendations, performance improvements, and its virtual assistant Alexa, which is enhanced with new conversational capabilities. But the biggest impact will likely be felt at Amazon Web Services (AWS), where it is building a platform for enterprise customers to build and scale their own AI applications.
Illustrating these efforts is Amazon’s announcement in September of its plans to invest up to $4 billion in Anthropic, an AI research startup similar to OpenAI, which created ChatGPT. As part of the deal, Athropic will use AWS cloud services to train and deploy its models, potentially serving as a proof of concept for Amazon’s new Trainium and Inferentia AI data center chips, which it has designed to be high-performance, low-cost alternatives. to third party devices.
Trading at a forward P/E ratio of 38, Amazon shares are more expensive than the average Nasdaq stock. But that premium seems reasonable, considering it’s well diversified Leadership company With a long record of success.
Another banger year?
Nothing is guaranteed Stock marketBut investors have plenty of reasons to be optimistic about 2024. For starters, the high inflation that caused so much trouble over the past two years has been reined in, and the Fed is likely to cut benchmark interest rates this year, making it even more difficult. It makes it easier for businesses to access the funds they need to maintain and grow their business.
That could be a huge boost for AI startups, many of which are leveraging enterprise-focused AI solutions from Nvidia and Amazon. Both tech giants appear poised for success in 2024 and beyond, and it’s not too late to bet on their long-term success.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, and Nvidia. The Motley Fool has a disclosure policy.