The Nasdaq Composite has been on fire in recent years, fueled by the advent of artificial intelligence (AI), improving economic conditions, uncontested elections and the Federal Reserve Bank’s recent moves to cut interest rates. After returning 43% in 2023, the tech-focused index is up about 30% in 2024. History suggests that the rally will likely continue into 2025.
The current bull market began on October 12, 2022, and while every rally is different, history can provide important context. Bull markets last on average more than five years. Since the current rally has just entered its third year, there is a good chance that the Nasdaq will continue to gain ground next year. It’s also worth noting that the Nasdaq has posted profits 73% of the time, going back 53 years, so history is on the side of investors. Finally, the Nasdaq has risen an average of 12% in recent years on positive gains, suggesting more upside potential lies ahead.
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Moreover, there is a resurgence in its popularity stock splits in recent years. As a result, investors have a renewed interest in companies splitting their shares, as this is historically preceded by years of robust revenue and earnings growth. One such company is Nvidia (NASDAQ: NVDA). The stock is up 26,920% over the past decade (at the time of writing), prompting management to make a 10-for-1 stock split earlier this year – following a 4-for-1 split in 2021.
Despite the recent run-up, there is reason to believe that Nvidia’s growth spurt will continue into 2025. Read on to find out why.
The adoption of generative AI has spread like wildfire over the past two years, as companies are eager to share in the productivity gains these advanced algorithms promise. Generative AI has proven adept at composing and summarizing emails, searching and shortening content, mining data, generating original content, and writing computer code – and new applications are being discovered every day. Automating and streamlining tasks saves users time and money, driving new users to adopt AI.
Nvidia pioneered graphics processing units (GPUs) that make all of this possible. These specialized chips provide the enormous computing power that brought AI to life. The secret lies in parallel processing, or breaking down computer-intensive tasks into smaller, more manageable chunks. Nvidia first developed these chips to render lifelike visuals in video games, but soon discovered other applications for this groundbreaking technology, including data centers, high-performance computing (HPC) and machine learning – an earlier branch of AI.