The Nasdaq has blasted higher over the history two years, gaining more than 43% last year and now heading for an boost of more than 33% for 2024. This is thanks to the artificial intelligence (AI) boom, as five of the point of reference’s most heavily weighted stocks and several others in the top 10 operate in this high-growth area. Today’s $200 billion AI economy is projection to reach more than $1 trillion by the complete of the decade, meaning companies that got involved in this technology early could greatly advantage in the years to arrive.

Why is everyone enthusiastic about AI? Because it could revolutionize the way many things are done, saving companies period and money – and that’s great information for profits growth. This alone could propose us optimism about the path the Nasdaq will receive next year.

But history also offers us rationale to depend in another Nasdaq triumph. Since 1990, five out of six periods of gains have involved the index rising for more than two consecutive years. So, the Nasdaq has generally posted three or more years of gains in recent times.

Of course, there’s no guarantee this will happen – indexes and stocks can shock us – but if it does, you’ll desire to be prepared. And the best way to prepare is to buy one particular distribute before the Nasdaq soars once again. Let’s discover out which one.

A member of all three major benchmarks

This player is a member of the Nasdaq, the S&P 500, and, most recently, it joined the Dow Jones Industrial Average. It’s advanced more than 2,400% over the history five years. But don’t worry. Thanks to its dominance in the AI economy and something significant unfolding correct now, it still could have plenty of room to run. And that’s why it still makes an excellent buy today, one that could again navigator the Nasdaq higher next year.

I’m talking about Nvidia (NASDAQ: NVDA), the seller of the globe’s most powerful graphics processing units (GPUs). These chips are key elements in many crucial AI tasks, such as the training and inferencing of models. Customers have recognized Nvidia’s strength here, and that’s why they’ve been willing to wait for deliveries of these top products and pay more than they would for rival AI chips. In truth, Oracle co-founder Larry Ellison even said in recent times that he and Tesla chief Elon Musk actually begged Nvidia’s chief, Jensen Huang, for more GPUs.

So, the globe’s biggest companies – those with the resources to invest heavily in AI – view worth in choosing Nvidia over the competition. This and Nvidia’s pledge to update its GPUs on an annual basis should keep it in the top spot in this quick-moving industry.

One thing that could push this top distribute higher

One thing in particular could translate into profits strength in the quarters to arrive and more gains for the distribute, too. This quarter, Nvidia is ramping up production of its recent Blackwell architecture, a game-changing offering with many customizable features, such as different chips and networking options. Blackwell is Nvidia’s strongest AI platform yet, and demand has been “staggering,” the business said during its most recent profits call.

Nvidia even expects several billions of dollars in Blackwell turnover during this first quarter of commercialization. So, as this launch unfolds and Blackwell starts contributing large to Nvidia’s already soaring turnover – it jumped 94% to $35 billion in the most recent quarter – investors may continue to flock to this economy chief.

But what about assessment? At 47 times forward profits estimates, Nvidia’s distribute isn’t dirt cheap. However, I don’t ponder this level is extremely expensive either, considering Nvidia’s leadership in the economy, commitment to recent concept, and one other key element: Nvidia’s profitability on sales. The business has maintained a gross spread of more than 70% over the history few quarters.

All this could boost Nvidia in the quarters to arrive and drive further gains in the Nasdaq in 2025. The excellent information is that even if Nvidia distribute takes a pause next year, the long-term profits picture remains luminous, meaning investors could still score a major triumph over period.

Adria Cimino has positions in Oracle and Tesla. The Motley Fool has positions in and recommends Nvidia, Oracle, and Tesla. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content associate offering monetary information, analysis and commentary designed to assist people receive control of their monetary lives. Its content is produced independently of USA TODAY.

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