Last year was great for the markets in general, but the index that really stood out was the Nasdaq. It climbed 28%, while the S&P 500 rose 23% and the Dow Jones Industrial Average increased by 12%. The Nasdaq, heavily weighted in tech companies, surged as investors piled into the industry's hottest new field: artificial intelligence (AI) stocks.
Today's $200 billion AI market is projected to top $1 trillion by the end of the decade, and investors have sought to get in early on this high growth story. The technology has the potential to transform many industries, saving companies time and money, while boosting profits as a result. And earnings growth often leads to positive stock performance.
As 2025 begins, it's logical to ask this question: After two years of gains, will the Nasdaq maintain the momentum this year? History says it will. If we look at the previous periods of gains since 1990, in five out of six cases, the Nasdaq has climbed for three consecutive years or more.
Of course, the market can surprise us and deviate from trend, but in general, history has shown itself to be a solid guide. Now let's take a look at my top AI stocks to buy before the Nasdaq takes off.
You may connect Meta Platforms (NASDAQ: META) mainly with social media. The company owns Facebook, Messenger, Instagram, and WhatsApp – which together have more than 3.2 billion users each
day.
But Meta is also becoming a giant in AI, developing its own large language model (LLM) to support tools we can all use, like the Meta AI assistant. The AI company made its largest area of investment last year and recently spoke of plans to continue increasing spending in this area. It aims to create an AI that can assist all its users with their daily tasks, work-related projects, and more.
Ultimately, this focus and the associated investment could make Meta a leader in this hot growth area and boost its revenue as well. For example, the company generates most of its revenue through advertising – and AI assistants can encourage us to spend more time on Meta apps, encouraging advertisers to spend more to get us there.
Considering all this, Meta shares — trading at only 24 times earnings projections even after winning last year of 65% – looks like a deal AI buy to break up before the Nasdaq ascend.
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)like Meta, may not be a company you automatically associate with AI. You probably know it best for Google Search, a tool that many of us use every day.
But it wins in AI in two ways. First, his Gemini LLM helps him improve search and make the experience better for those who advertise across Google. And second, Alphabet offers AI tools and services, including Gemini, through Google Cloud, its cloud computing business.