The Nasdaq Composite (NASDAQINDEX: ^IXIC) has had a monster two-year run. After gaining 43% in 2023, the index put up around 30% gains in 2024, marking one in all the best-performing periods in its history.
Contrary to what your instincts may let you know, this doesn’t mean the index is ripe for a correction in 2025. The truth is, the other may occur. Going back to 1972, every 12 months with 30% or higher returns is followed by a mean return of 19%, likely attributable to the momentum factor. While it doesn’t guarantee good returns to your portfolio in 2025, it looks more likely than not that the nice times will roll, given the historical data.
History indicates that the Nasdaq may soar again in 2025. Here is one artificial intelligence (AI) stock to purchase before it does.
Nasdaq returns during the last two years have been propelled by the AI boom. A number of stocks related to AI, resembling Nvidia, are actually trading at nosebleed earnings multiples. Nonetheless, one stays undervalued and is hiding in plain sight for investors to purchase in 2025: Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).
The owner of Google, YouTube, and other technology assets has been bogged down by a narrative that it’s losing market share to recent AI tools resembling ChatGPT. It’s true that ChatGPT gained loads of popularity, nevertheless it hasn’t come on the expense of Google Search’s profitability. In line with third-party estimates, Google Search still has an approximate 90% market share amongst engines like google worldwide, which hasn’t budged much in the previous few years.
Google is ingrained in the fashionable digital operating systems and has billions of each day users. Now, the corporate has a possibility to supercharge the business with recent AI products, resembling its recent search result summaries, the Gemini chatbot, and Google Lens (which lets you search what you see). Google desires to will let you search about anything on this planet around you and get a thoughtful, AI-powered response behind it. It will open up more opportunities for search queries in day-to-day life, which can result in more promoting revenue for the business.
Last quarter, Google Search revenue grew 12% 12 months over 12 months to $49 billion.
Alphabet has many levers it will probably pull to maintain revenue and earnings growing. There’s the aforementioned AI boom that may help grow Google Search. There’s YouTube, which keeps gaining market share in video streaming and grew revenue by 12% last quarter. Google Cloud helps Alphabet sell its AI breakthroughs to 3rd parties and growing revenue by an astounding 35% 12 months over 12 months. At this pace, the segment will hit $100 billion in annual revenue in a number of years.